County Recorder and Ucc

Recorders Guide to New Article 9-5

of the Uniform Commercial Code
Pre-Effective Version2
Prepared by:
Property Records Industry Joint Task Force
Standards Committee
Carl R. Ernst, Chair
Draft Three
December 21, 1998
Note 1This draft paper is published for discussion only. Papers must contain the notation Approved by the
Executive Board of the Property Records Industry Joint Task Force on [date] to represent an official paper issued
by the Task Force.
Note 2The intended model effective date of new Article 9 is July 1, 2001. It may be a later date in your state
depending on your states version of the statute. Until effective date in your state, recording offices must abide by
prior law. Until then this Guide deals with future requirements.

Table of Contents
Acknowledgments ..............................................................................................................3
1. Introduction....................................................................................................................4
2. Real Estate and the Uniform Commercial Code*.......................................................7
3. Frequently Asked Questions .......................................................................................12
4. Principles of New Article 9 Part 5 (A Rebalancing Act)* ........................................17
5. Specific Provisions of New Article 9-5 and 9-7..........................................................22
6. Issues for Recorders.....................................................................................................27
7. Optional Article 9-5 Language Pertaining to Recording Office Operations..........32
8. Reading the National Standard UCC Forms ............................................................37
9. Filing Operations Under Part 9-5 (no chapter at this time) ....................................42
10. Searching Operations Under Part 9-5 (no chapter at this time) ...........................43
Note: Appendices I through IV contain the actual language of approved Article 9 as of July 30, 1998
Appendix IArticle 9 Part 1Definitions ...................................................................44

Appendix IIArticle 9 Part 3Perfection and Priority.................................................
Appendix IIIArticle 9 Part 5Filing.............................................................................
Appendix IVArticle 9 Part 7Transition .....................................................................
Appendix VWhere to FileA Summary Chart Under Prior UCC Article 9* ..........
Appendix VIUCC Drafting Committee .........................................................................
Appendix VIINational Standard UCC Filing Forms ...................................................
Appendix VIIIState Language Variations....................................... No Appendix Yet
* Ernst Publishing Company. All rights reserved

Acknowledgments
The following people were members of the Standards Committee which prepared this Guide. If indicated after her
address, the person also represents an association.
R.K. ArnoldPresident, MERS, Inc., McLean, VA
Trish BogenriefVice President, Lexis Document Services, Springfield, IL
Diana BradrickRecording Manager, Snohomish County, Everett, WA
L. Roberta Canier, Ernst Publishing, Grass Valley, CA
Mark S. EppleyProduct Marketing Specialist, Document Resources, Baltimore, MD
Carl R. ErnstPresident, The Real Estate Guide Inc., Scottsdale, AZ
Lisa K. FisherExecutive Director, American Society of Notaries, Tallahassee, FL
Carol FoglesongRecording Manager, Orange County, Orlando, FL
Gerald A. GibsonClerk of Circuit Court, City of Danville, Danville, VA IACREOT
Carla GustafsonSenior Vice President, FT Mortgage Companies, Dallas, TX
Sherry Mason HatcherPresident, National Data Access, Columbia, SC NPRRA
Michael Hatesohl, National Information Consortium, Topeka, KS
Bob HendersonDirector, Legal Records, Jefferson County, Louisville, KY
Katherine IversonAttorney, Bankers Systems, Inc., Saint Cloud, MN
J. Patrick KellyClerk and Recorder, El Paso County, Colorado Springs, CO
Suzi KoscheRecording Supervisor, Pierce County, Tacoma, WA
Margaret LowtherRecorder/Auditor, Storey County, Virginia City, NV County Fiscal Officers Association of Nevada
Joyce Adams McLeanRecorder, Chester County, West Chester, PA
Mark MonacelliRecorder, St. Louis County, Duluth, MN
Neil Olson, CMDC, Irvine, CA Real Estate Information Providers Association
Janet R. ParkinsClerk & Recorder, Stillwater County, Columbus, MT
Bernice A. PetersonRecorder, Sonoma County, Santa Rosa, CA NACRC
Darrell Pierce, Dykema Gossett, Chicago, IL
Richard PozdolSenior Underwriting Counsel, Chicago Title Insurance Company, Chicago, IL
Sharon RichardsonPresident, Richardson Consulting Group, Novato, CA
Lynda M. RiversRecorder, Kane County, Geneva, IL
Aaron A. RomanoPresident, North American Deed Company, Las Vegas, NV
Joni RomerilRecorder, Marion County, Indianapolis, IN
Jeanette Rozier, De Kalb County, Decatur, GA
Elaine K. SheehanMortgage Compliance, Greatland Corporation, Grand Rapids, MI
James P. Sibley, Title Data, Inc., Houston, TX
William StokesPresident, Faxxon Legal Information Services, Springfield, IL
Richard N. TakechiRegister of Deeds, Douglas County, Omaha, NE
Greg TaylorImaging Services Consultant, Hart Information Services, Austin, TX
Deborah ThawExecutive Director, National Notary Association, Chatsworth, CA
Milton ValeraPresident, National Notary Association, Chatsworth, CA
Anthony J. VigliottiRegister of Deeds, Worcester County, Worcester, MA
Joyce A. WattsRegister, Allegan County, Allegan, MI
David R. WilliamsExecutive Director, Georgia Superior Court Clerks' Cooperative Authority, Atlanta, GA
Dianne WilsonClerk, Fort Bend County, Richmond, TX
Everett WohlersNational Information Consortium, Boise, ID
Val WoodSuperintendent of Records, King County, Seattle, WA
Sharon YoungState Recorder, State Recorders Office, Anchorage, AK
Some of the materials in this Guide are based on copyrighted articles by Carl R. Ernst, Ernst Publishing Co.,
publisher of The Real Estate Recording Guide. Ernst Publishing reserves all rights in these articles.
Thanks also to others on the Task Force who contributed to this effort.
Acknowledgments

Chapter 1Introduction
[Note to committee: This chapter need work to get the reader started. Suggestions are welcomed, of course.]
Article 9 of the Uniform Commercial Code deals with secured transactions involving personal property whereas
real estate recording law deals with real property. For some kinds of secured transactions, it is necessary for the
secured party to file a form, called a financing statement, with the appropriate filing office. Some of these
transactions require filing the form with a recording office.
This Guide explains
(1) how the Uniform Commercial CodeUCC for shortworks with respect to recording offices, how the UCC
filing differs from real estate recording,
(2) what a financing statement and changes to it contain, and
(3) what the job of a recording office is with respect to accepting filings and searching for filings under the UCC.
This Guide has been prepared well in advance of the actual enactment and effective date of the proposed
new Article 9 so that recorders will be aware of issues important to them under the new Article 9. The
Guide explains these issues, and proposes statutory language to deal specifically with the differences
between central UCC filing offices and recording offices.
Although UCC filings may represent only a few percentage points of the documents accepted for recording in
recording offices, it is expected under the UCC that each recording office is conversant with its provisions and
properly follows the rules for acceptance and rejection of UCC filings.
This Guide is designed for recording office personnel, whether or not they have experience with accepting filings
under the present UCC. The Guide does assume that the reader is familiar with the recording of real property
documentsdeeds, mortgages, assignments and releases. The Guide therefore starts with a review of differences
between real estate law and the UCC.
This is not a legal text. Legal interpretations of Article 9 will come from the legal community and courts as they
look at issues raised by the new Uniform Commercial Code Article 9. Rather, the focus of this Guide is to give
you, the real estate recorder an introduction to what the Uniform Commercial Code is and how the new Article 9
will impact the operation of recording offices.
Terms Used in this Guide

There are some term used in this Guide that could be misconstrued unless you understand their specific meanings,
as follows:
1. The term filing is used interchangeably to mean recording when referring to the handling of UCC in a
recording office.
2. UCC filing office refers to a central filing office in a state that handles only UCC filings whereas a recording
office handles real property recording including realty-related UCCs. The term recorder is sometimes used
as shorthand for recording office.
3. This Guide uses the term prior to refer to the version of Article 9 in effect before enactment of the
proposed model act, which is referred to as the new Article 9. Article 9-4 refers to the filing part of the
prior UCC filing statute, whereas Article 9-5 refers the filing part of the new, proposed model act.
4. The terms personalty and personal property are used interchangeably to refer to the collateral securing
transactions under Article 9 of the Uniform Commercial Code, as opposed to real property.
5. The term mortgage also means deed ot trust.
New Version of Article 9

The version of model Article 9 used in this Guide is entitled Pre-Final Official Draft and is dated July 30, 1998.
It is the draft approved by the National Conference of Commissioners on Uniform State Laws (NCCUSL).
Deleted: Appendix VIIIState

Variations to Chapter 7
Recommendations

Internet Sites
You can locate the latest version of Article 9 at http://www.law.upenn.edu/library/ulc/ulc.htm.
You can locate a copy of this document and information about the Task Force at http://faxxon.cifnet.com/
taskforce/ (home page www.faxxon.com).
How To Use This Guide

This Guide is written to be read from front to back. If you are very conversant with the principles and practices of
prior Article 9-4, you may be tempted to skip around. We do not advise this. New Article 9 took about ten years,
untold hours of professional time and innumerable arguments to fashion. Its provisions fit together like a gigantic
puzzle that has just been completed. If you try to consider just one area and drop apiece or two, its meaning may
unravel before your eyes.
All statutory language is printed n italics.
The AppendicesThe Danger of Reading Too Much Into New Article 9-5
Appendices I through IV contain the actual language of Article 9. You must be careful if you read this material
that you do not misconstrue language that was no different from what appears in prior Article 9-4. Before you
decide that some language is ill-considered, confusing or wrong, you must compare it to the like section in prior
Article 9-4 to see if there is any difference. Even with the major changes in the law, a significant part of it is still
the same as before (which makes sense since the UCC has been around since the 1950s.
Background
A drafting committee of the National Conference of Commissioners on Uniform Laws and The American Law
Institute has spent the past several years developing a new text revising Article 9 of the Uniform Commercial
Code. New Part 5, which replaces prior Part 4, deals with the system for filing, indexing and maintaining UCC
forms which provide notice of security interests to the business public.
The real estate recording industry has been represented in this process to the extent that the co-sponsors of the
Task Force, NACRC and IACREOT, had representatives on a committee comprised of public and private industry
participants, as part of what was known as the Article 9 Filing Project. That committee has not been active for
some time now.
As a result, there has been no single, national forum for recorders to review or influence the course of the
revisions process in its later stages until the creation of the Property Records Industry Joint Task Force.
The mission and objectives of the Property Records Industry Joint Task Force include provision for consideration
of the Uniform Commercial Code and its impact on recording operations throughout the US. The Property Law &
Legislation Committee of the Task Force has identified the UCC as its first area of focus for review and lobbying
on behalf of recording offices nationwide.
Task Force Position (Proposed)

The Property Industry Task Force Steering Committee believes, based on the following analysis, that the new
Article 9 Part 5, is a significant advance in the direction of uniformity of the Uniform Commercial Code among
the states, and that both the public and private sectors should support its passage unaltered in all states, except for
inclusion of the optional wording discussed in the chapter entitled Optional Article 9-5 Language Pertaining to
Recording Office Operations.
This Guide is not written for the purpose of arguing any of the following issues, which are of concern to certain
individual states.
1. Dual filing
2. Farm-related and consumer goods local filing

3. Loss of income to counties
4. Lack of signature requirement
These issues are explained as appropriate to understanding the new Article 9.
These issues will be addressed in each state when the state legislature reviews the revised Code for enactment.
This Guide does, however, discuss the reasons for these and other changes. The chapter entitled Issues for
Recorders discusses all the formerly controversial issues.
Comments and Suggestions

Your comments and suggestions about this Guide are welcomed and encouraged. You may forward them in any
form to Carl R. Ernst, Chair of the Standards Committee:
Call 602-563-6479
Fax 602-563-6480
Email cernst@iname.com
Enter comments in the Standards Committee discussion group at http://faxxon.cifnet.com/taskforce/
Good reading.

Recommendations

Chapter 2Real Estate and the Uniform Commercial Code
[Will be put in order as chapter 2 in next revision.]
The constituency of recording offices, the people who specialize in the preparation and filing of real property
documents, are unfamiliar with the Uniform Commercial Code. This chapter is an article written by Carl R. Ernst
to explain the differences between real estate and UCC to these people, and is used here as an introduction to
recorders with his permission.
What Does UCC Have To Do With Real Estate?

This chapter has been written for two reasons:
1. If you get involved with fixtures that could be construed by a court as equipment, you need to use the UCC to
protect your security interest in such items of collateral.
2. Even for those of you who do not get involved with the UCC, understanding the differences between the
recording systems for personal property liens and real property liens illuminates the most significant features
of real estate recording systems.
What is the Uniform Commercial Code?

The simplest way to compare real estate statutes (RE) and the Uniform Commercial Code (UCC) is to say that the
UCC is to personal property as mortgages/trust deeds are to real property. Although this comparison is
inaccurate in the details, as discussed below, it is a good place to start in understanding both the statutory and
practical differences between real estate recording and UCC filing. (As in other sections of this Guide, the term
mortgages will be used in this chapter as shorthand for mortgages and deeds of trust.)
It would be more accurate to say that the security agreement behind each UCC loan transaction is the practical
equivalent of the mortgage behind each real estate loan. Each of these agreements gives one partythe secured
party (UCC) or mortgagee (RE)a security interest in property owned by the other partythe debtor (UCC) or
mortgagor (RE)as collateral for a loan. The filing of a UCC financing statement and the recording of the
mortgage give notice of the lien to the rest of the world.
Here are a number of ways to compare UCC filings with real estate recordings:
1. Real estate is a document recording system/

UCC is a notice filing system
Both real estate and UCC laws put the public on notice about defined types of transactions, but the ways they do
this are very different. Recording a real estate document means literally that the original document representing
the transactionthe deed, mortgage, etc.is placed in the public record at the recording office. Therefore,
anyone who has a need to know about the transaction can read the actual documents in their entirety.
Under the UCC, a financing statement is said to be filed. This financing statement is not the transaction itself,
but rather a summary of the transaction intended to notify the public in a general way that the secured party has
some kind of lien on specified personal property of the debtor. Anyone who needs to know the details of the
actual transaction must contact the secured party, who keeps the security agreement and other documentation in
its own private, internal records.
Recording of realty-related UCCs is a hybrid of filing and recording, but is almost always recorded in the
grantor/grantee index as a type of document.
2. Real estate is an asset-based system/

UCC is a liability-based system
The old clich is that no more real estate is being made; thats an important distinction between real estate law and
the UCC. Each local recording office has under its responsibility a certain area of land each piece of which is

identifiable on its records. Therefore, every document recorded points in some way, direct or indirect, to specific,
known parcels of land. Like motor vehicle records, we can say that real estate recording systems are asset-based.
Personal property, on the other hand, can vary from the very specific and identifiablefor example, a certain
farm tractorto the wholly intangiblefor example, accounts receivable. The assets that collateralize a debt
under the UCC are only identified in the collateral statement on the financing statement. Therefore, UCC systems
are designed to give notice of liability, not to catalog assets. (A few categories of personal property, such as motor
vehicles, are titled, but that is the exception to the rule.)
3. All real estate documents are recorded in a county or other local office/
Most UCC financing statements are filed in a central state agency
Since UCC filings do not have to connect to an asset-based system, the filing system does not need to be
localized. Therefore, in most states, UCC filings other than those related to real estate collateral are maintained at
a central state agency, usually under the Secretary of State.
4. Real estate documents are accepted by 3,600 recording offices/

UCC financing statements are accepted by over 4,300 filing offices
Every real estate recording office must accept UCC filings with certain personal property collateralfor example,
a telephone system wired throughout a buildingwhich may also be considered fixtures. Therefore, in a sense
real estate recording offices are a subset of UCC filing offices.
The other 700 UCC filing offices that are not also recording offices are accounted for by 50 central state filing
offices, plus local variations on the prior UCC model act that require UCC filing in towns in many New England
States and in separate offices in Pennsylvania. The new Article 9 only requires filing on personal property
collateral in central UCC filing offices and on realty-related collateral in recording offices.
5. Real estate law consists of loosely related statutes that vary widely from state to
state/
UCC law consists of state variations on a nationally promulgated model act
The Uniform Commercial Code model act is drafted by an independent committee of attorneys acting under the
authority of the National Conference of Commissioners of Uniform State Laws. NCCUSL, in its own words, is
now in its 106th year. The organization is comprised of more than 300 lawyers, judges, and law professors,
appointed by the states as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, to draft
proposals for uniform and model laws and work toward their enactment in legislatures. Since its inception in
1892, the group has promulgated more than 200 acts, among them such bulwarks of state statutory law as the
Uniform Commercial Code, the Uniform Probate Code, and the Uniform Partnership Act.
UCC professionals joke endlessly about the lack of uniformity in the Uniform Commercial Code because many
states, in the process of enacting their own version of the model act, have amended the model act in a variety of
ways that confuse and confound even UCC documentation professionals.
In truth, however, the UCC is very uniform by comparison to real estate law. The only area of real estate law
where model acts have been developed is in the form of notarial certificates, and even in this one aspect of real
estate documentation there are three different model acts for each state to chose from.
6. Real estate recording is document based/

UCC filing is forms-based
Although some states have promulgated standard documents to deal with various aspects of real estate
transactions, there is nothing like the standards developed for forms that are used for UCC financing statements
and other UCC filings. In real estate, you prepare a document for recording; in UCC, you fill in a UCC form for
filing.

Recommendations

This is not to say that forms are not used in real estate transactions; many states require transfer tax and other
types of forms to accompany certain types of documents, but the documents themselves are not forms. Nor is this
to say that real estate is rules-based whereas UCC is forms based. Both types of documentation require adherence
to rules affecting the content and form of the document.
7. Each real estate recording has a life of its own/

A UCC filing may include many related forms
In the vocabulary of the UCC, a filing consists of an original financing statement, any subsequent amendments to
the original financing statement, and any continuations to the original financing statement. All these related
forms, taken together, comprise an active UCC filing. The indexing systems used to track UCC filings
generally are designed to reflect the current status of the filing, that is, name and address changes and assignments
are all recorded in a master computer record as changes occur.
In a real estate indexing system, on the other hand, each document usually stands on its own. For example, an
assignment is indexed alone in the grantor/grantee index. Except in the document itself, there is no indication in
the indexing system as to where the original mortgage is located.
8. A real estate recording is forever/

A UCC filing is time limited
Once a real estate transaction is recorded, the document copy is essentially maintained in the recorders system for
all time. In the case of a mortgage, for example, the satisfaction is recorded with a referencebook & page,
etc.back to the original mortgage document, and the two documents remain on the record although the
transaction is complete.
A UCC filing is typically active for a period of five (5) years, unless continued for an additional five years at a
time. During each five year period, the filing may be amended any number of times, for example, for a change
in the debtor name, an assignment to a new secured party, or a change in the collateral securing the underlying
debt. Also during any five year period the filing may be terminated if the underlying debt is paid off.
However, unlike a mortgage, a UCC filing will automatically become ineffectivelapseat the expiration of
the five year period unless a continuation statement is filed, typically, within six months prior to the lapse date.
When a UCC filing is terminated or lapses, the records relating to the filing are literally deleted from the recordkeeping system of the filing office. (A copy of the forms as they were filed will usually continue to exist on some
imaging medium such as microfilm, but the indexes by which the forms can be accessed will no longer be
available to a searcher.)
There is a similarity between the law of real estate satisfactions and the law of UCC terminations. Both typically
contain provisions requiring the lender to submit to the recorder, or to the debtor for recording, a termination form
(UCC) or a release of mortgage document (RE) upon request of the debtor after the debt is paid.
9. A mortgage is satisfied, released or canceled/

A UCC filing is terminated or lapses
Since a UCC filing is time limited, its effectiveness is said to lapse by the operation of law after a period of
time, five years from the date the original was filed in most states.
In fact there is much confusion in real estate circles because of the UCCs use of the word release to refer to a
UCC filing that does not terminate the original financing statement. In UCC parlance, a release usually refers to a
partial release because a full release would usually be the equivalent of a termination.
10

10. Real estate documents are recorded and returned/
UCC transactions are filed and acknowledged
Heres another confusing difference in the way these two types of documents are handled. It is usually not
necessary to submit a copy with a real estate document. You just send in the original; the recording office stamps
and images it; and the document is returned to you for safekeeping. (Yes, we recognize that certain recording
offices, in Louisiana in particular, do not return the original so a copy must be submitted, like a UCC filing, for
acknowledgment of the recording reference information.)
The typical UCC form, on the other hand, traditionally had three parts, carbon interleaved. The third part is called
the acknowledgment copy. The filing office stamps the three part form with filing reference numbers, the
imprint of which is on the third copy because of the carbon, and returns the acknowledgment copy to the filer.
This definition of the word acknowledgment has nothing to do with the acknowledgmentthe notarial
certificateon a real estate document.
Thus, when the UCC documentation specialist calls the recording office and says, Wheres my
acknowledgment, the recorder responds, Its on the document. Whats the problem?
11. Real estate documents may have exhibits, acknowledgments, etc./

UCC filings may have attachments
A typical real estate document may include separate pages of legal descriptions of property, acknowledgments,
and other materials required in order for the recording to be legally sufficient. Except for very simple transactions,
such as a single mortgage release, most documents require multiple pages.
On the other hand, UCC forms, properly completed, usually do not require any additional pages beyond the
form itself in order to be legally sufficient, unless the space on the form itself is inadequate to list debtors, secured
parties or collateral. Therefore, additional pages are known as attachments to the form. In some filing offices,
the attachments are actually stored in files separate from the form itself because they are oversizes. that is the
form is frequently 5" by 8" while the attachments are 8" by 11," so they dont fit in the drawers where the forms
are filed.
12. Basic real estate recording fee structures are page-based/

Basic UCC filing fee structures are forms-based
Reflecting the differing necessity for additional pages, the typical real estate recording fee in a state can be stated
as so many dollars for the first page of the document and so many other dollars for each subsequent page.
Additional fees are typically based upon transactions indexed, references to previously recorded documents, and
document format requirements.
The typical UCC filing fee in a state can be stated as so many dollars for the form and so many dollars for each
debtor name indexed. Some states charge for attachments, but many states have no fees for attachment pages,
since, as noted above, there is in most cases no reason to attach anything to a UCC form as it is sufficient by itself
as notice of the transaction. Some additional fees are similar to real estate recording fees, such as for debtor name
indexing and non-standard form.
13. Signatures on real estate documents require acknowledgment/

Signatures will no longer be required on UCC forms
All states require the acknowledgement of signatures on real estate documents by a notary; some also require
witness signatures as well. This is to assure to some extent that signatures are authentic on original documents
submitted for recording.
Both prior and new Article 9 require that the debtor sign the security agreement which is referenced by a UCC
financing statement, there has never been a requirement for authentication since security agreements are private
11

Recommendations

documents between known parties. Under prior Article 9, the debtor signs the financing statement; under new
Article 9, the debtor is no longer obliged to sign (although she may) because the security agreement gives the
secured party the authority to file the notice form.
14. Most recording offices index assignments of mortgages only by assignor and
assignee/
Assignments of security interests in personal property must be indexed by debtor as
well as assignor and assignee
There is no statutory requirement in real estate law or in the prior UCC regarding the indexing of assignments of
mortgages. It is the practice of most recording offices to index the assignor as grantor and the assignee as grantee.
This practice however makes it difficult to match up mortgages and assignments in recording offices.
The new Article 9 requires recording offices also to index the debtor name so that the assignment is attached to
the initial financing statement in a search by debtor name.
(Recorders who do not index mortgagors on assignments should consider extending their indexing procedures to
make it easier to match assignments to mortgages.)
15. Many recording office document reject criteria are based on experience/
Reject criteria for UCC forms will be specified by statute
Recorders and UCC administrators have traditionally established procedures to reject documents that they believe
might be legally invalid. In addition, there are some state statutes that specifically require a certain format or
element of content, which require rejection.
Under the new Article 9, the reasons for rejection of a UCC form are stipulated. A form may be rejected only for
the enumerated reasons and no others.
12

Chapter 3Frequently Asked Questions (FAQs)
1. Whats Different About Where to File UCC Financing Statements Under the New Article
9?
As a general rule under the new Article 9, a financing statement is properly filed in the filing office
(1) for personalty collateral, where the place of business or individual residence is located, and
(2) for realty-related collateral, where the collateral is located.
a. No Local Personalty Filing

This rule differs from the where to file rule under the prior Article 9 to the extent that some 28 states require local
filing for two or three personalty collateral:
(1) Farm related collateral, including equipment used in farming operations, farm products, and accounts
arising from sale of farm products,
(2) Crops, and
(3) Consumer Goods.
(Filings are rare in the third category, consumer goods.)
b. No Dual Filing
In addition nine (9) statesArkansas, Massachusetts, Missouri, Mississippi, North Carolina, , New York, Ohio,
Pennsylvania and Virginiahave not done anything about their dual filing systems. New Hampshire in 1998
enacted legislation to eliminate its dual filing system as of July 1, 2001.
c. No Separate UCC Index Required in Recording Offices

Under the new rule, there will be no fling for personalty at the local level. Therefore, there will be no need for any
recorder to maintain a separate UCC index for these items. All UCC filings received will be indexed in the
grantor/grantee index
Take a look at the language of Section 9-307 in Appendix II if you would like to know more about the fine points,
such as, where to file on personalty of an individual or an off-shore corporation.
2. What About Dual Filing?

Dual filing is an anachronism that only lives on because of the potential impact of its elimination on the funding
of local government in those nine (9) states that still require itArkansas, Massachusetts, Missouri, Mississippi,
North Carolina, New York, Ohio, Pennsylvania and Virginia. Since 1995 two statesMaryland and Vermont
have converted from dual filing, and New Hampshire will convert as of July 1, 2001.
3. Does a UCC Filing Need to Contain an Address in the County Where It Is Filed?
No. The debtor and secured party may be located outside the county, and the address of the record owner, even if
it is in the county, is not required to be included on the filing under Article 9-5. However, a description of the
real property to which the collateral is related is required with both initial financing statements and with any
amendments. See the Chapter 7 discussion of optional language to change this requirement.
4 .What Is Different About Indexing UCC Filings Under New Article 9-5?
There is one very important change: On statements of assignment, debtor and record owner names must be
indexed as grantors as well as the assigning secured party. There is no change required in input rules or
indexing logic.
Recommendations
13

5. What Are the Most Confusing Differences Between Real Estate and UCC?
Two language variations cause the most trouble to recorders:
(1) ReleaseA mortgage is released or satisfied; a UCC filing is terminated. If a release is filed against a
UCC filing it means a partial release of collateral; there is no such thing as a full release of a UCC filing.
(2) AcknowledgmentSignatures on real estate documents are acknowledged by a notary; acceptance of a UCC
filing is confirmed by returning an acknowledgment to the filer.
For a complete summary of differences between UCC filing and real estate recording, read Chapter 2.
6. Why No Signatures?
Under new Article 9, which in part is designed to foster efficient central electronic recording systems, new
protections exist for both debtors and secured parties, protections that do not depend on signatures, which of
course can be forged anyway. Among the principles that protect debtorswho today have no protection from
fraudulent filings under Article 9is a new right for them to file corrections when they believe filings against
them are incorrect. Searchers and secured parties are protected, as they have always been in recording offices, by
a new indexing system required in UCC offices that keeps all filings on the index until lapse date.
It is actually not correct to say that signatures have been eliminated. UCC forms are not documents in the same
sense as real property documents. Signatures are still required on the underlying documents, which recorders
never see.
It is also true as a consequence of the no-signature requirement that there is no notarization requirement.
7. Does a Recording Office Need To Do Anything When a Filing Lapses?

No. Once a filing has lapsed for a year, a filing office may eliminate it from its index; however, there is no
requirement to eliminate it. Unlike UCC filing offices, recording offices never eliminate entries from their
grantor/grantee index. It is up to anyone reviewing such filings to determine whether the filing is effective or
lapsed.
8. What About Lost Revenue in My Office?

Each recording office should compute the amount , if any of what we have called lost net revenue. This is
defined as lost revenue from personalty filings that no longer are handled by recording offices, less reduction in
recording office costs from not having to maintain a UCC index. The task force urges each state to maintain
revenue neutrality for recording offices by increasing, where necessary, local recording fees or by sharing with
recording offices increased central office UCC filing fees.
9. What Are the Criteria For Rejecting a UCC Filing?

Unlike the prior Article 9, the new Article 9 is specific about the instances in which a recorder is allowed to reject
a UCC Filing. The full list of reason s for rejection appears on page 24 of this Guide. These, and only these,
errors and omissions are cause for rejection. Other home grown reject criteria are not recognized under the
Uniform Commercial Code. For example, you may not refuse a filing just because it does not have an address in
your jurisdiction. A UCC filing that does not contain one of the enumerated errors is considered filed or
recorded, even though a recorder refuses it. Therefore, by refusing an otherwise valid UCC filing, a recorder is
guilty of creating a hidden lien. (This is a type 1 hidden lien, as discussed under item 6 in Chapter 6.)
10. What Is the Responsibility of a Recording Office When Rejecting a UCC Filing?
If a UCC filing is rejected, the recording office must communicate to the person who submitted the filing:
(a)
the fact that the filing was rejected,
(b)
the reason for rejection, and
14

(c)
the date and time1 the filing would have been filed had it been accepted.
In addition, the office must return the reject notice within two business days unless the wording of 9-520 has been
changed per the recommendation in Chapter 7.
11. What Happens If a Recording Office Rejects a Legally Valid Filing?

The section entitled What Constitutes Filing/What May Be Rejected (9-516, 517, 520) in Chapter 5 includes a
chart of all the legally valid reasons for which a UCC filing can be rejected. If a recorder rejects a filing for any
other reason, the filing is still legally effective, even though no one can find it on the recording office index. It
constitutes a hidden lien. (The discussion of hidden liens in Chapter 6.) Under new Article 9-5, all UCC filing
offices, including recording offices, are to go out of the business of reviewing UCC forms for legal effectiveness.
Someone on the Standards Committee summarized this in the rhyme: DONT OVERDUE THE REVIEW.
It is therefore the responsibility of each recording office to assure that it follows the rejection rules as stated and
without local modification.
12. How Can Recorders Work With the Central Filing Office Administrators?
First and foremost, each state recorder association should inform the state administrator and legislators about the
optional language they wish to have included in their version of new Article 9.
State level administrators will be asking for funds as part of the legislative process to make the system changes
they need in preparation for the new act. To the extent that recorders would like access in their offices to the
central UCC index on behalf of their local constituents, each state recorder association should make this known at
the same time as the state level administrator ask for funds.
13. What Do Recorders Need To Know About Transition Rules?

The transition from the prior Article 9 will be complex for central filing offices, and for recording offices in those
states where filing of consumer goods and farm-related collateral is still at the local level. Actual transition
procedures will be added to Chapter 9 once it is clear how they will work..
In any event, it will be best to refer any requests from the public about these rules to an attorney.
14. Can You Sum Up the Responsibilities of a Recording Office Under the New Article 95?
The new Article 9 clarifies the ministerial nature of any office that accepts UCC filings with respect to the
rejection, acceptance and indexing of UCC filings. The responsibilities of a recording office are enumerated in
what is called Subpart 2. Duties and Operation of Filing Office, as follows:
1. A recording office must accept any UCC filing that
(a)
is submitted on the national standard forms or state approved forms or methods, and
(b)
does not have a defect specifically enumerated in Section 9-516(b) (see the reject chart in Chapter 5),
and
(c)
is accompanied by at least the correct filing fee.
1. If a UCC filing is rejected, the recording office must communicate to the person who submitted the filing:
(a)
the fact that the filing was rejected,
(b)
the reason for rejection, and
(c)
the date and time1 the filing would have been filed had it been accepted
1. Once a UCC filing is accepted, the recording office must
(a)
assign a unique number, e.g., book & page,
15

Recommendations

(b)
create a record, such as a copy of the UCC filing, containing the unique number and the date and time
of filing1,
(c)
maintain the record for public inspection,
(d)
index the filing as it would be under the mortgage/deed of trust indexing statute of the state, but to
include in any event the name of the debtor and record owner as if they were mortgagors,
(e)
index the filing by the unique number, and
(f)
if the filing is an assignment, index it under the name of the assignor and debtor and grantor and the
assignee as grantee.
Note 1The time need not be specified if the office assigns the identical time to all filings received during one
day.
15. Are We Required to Do UCC Searches for the Public Under the New Article 9?
Not unless your office has done so in the past and wishes to continue to do so. You must at least continue to
make available to the public the information on your grantor/grantee index that allows the public to obtain a
copy of the financing statement and related filings. It would be good practice for you to provide to the public a
written manual outlining your indexing rules, search logic, and how to conduct a search using your in-office
terminals or remote communications.
Other
Based on discussion of the new Article 9 at the 10/8/98 committee meeting and questions we receive, this section
will be expanded to include other questions that have been brought up. Future revisions will continue to expand
this section as recorders utilize this Guide and address more questions to the committee.
Chapter 4Principles of New Article 9 Part 5 (A Rebalancing Act)

Article 9 of the Uniform Commercial Code has been revised by a drafting committee under the auspices of, and
has been approved by, the National Conference of Commissioners on Uniform State Laws. The draft used for this
Guide is dated July 30, 1998.
This chapter was written to summarize Article 9-5, Filing, which replaces the prior 9-4, including the most
significant changes to Article 9-4.
The first sentence of the drafting committees prefatory comments to a prior draft states, The filing system is the
heart of Article 9. In other words, the drafters recognize that the proper functioning of the UCC filing system in
each state is a necessity for Article 9 to work equitably. Therefore, the drafting committee spent considerable
effort toward improving the UCC filing system.
A number of provisions of the revised Article 9-5 remain essentially the same, including the five-year lapse date,
the six-month continuation window, the basic content of financing statements, and realty-related filing rules.
These provisions are not discussed in this chapter. Reference to filing office in this article means the central
filing office for each state that has enacted new Article 9-5.
Four New Fundamental Principles

The actual functioning of UCC filing systems today is almost completely ignored in the language of Article 9-4.
As a result, many different variations of UCC systems exist for filing and searching among the states today. More
importantly, from both a legal and administrative point of view, Article 9-4 and the UCC systems that have grown
up under it favor filers who make mistakes over searcherseven those searchers who dont make mistakesand
have caused litigation resulting in contradictory decisions. In order to redress these inconsistencies and inequities,
the new Article 9-5 alters the principles behind UCC filing systems. The three new, fundamental principles
involve
16

(1)
(2)
(3)
(4)
Rebalanced Responsibilities of Filers (Do No Harm) and Searchers (Determine Effectiveness)

Modified Role of Filing OfficesFull Disclosure and Rejection Criteria
Media NeutralityNo Signatures
Debtor Empowerment
(1) Rebalanced Responsibilities of Filers (Do No Harm) and Searchers (Determine Effectiveness)
Proposed Article 9-5 rebalances in a more equitable and definable manner the relationship between and
responsibilities of (a) financing statement filers (b) subsequent searchers.
(A) Filers
Under the prior Article 9-4, what one commentator (Carl Ernst) has called in the past dumb filers have gotten
too much help (1) from filing offices that have helped correct filer errors by rejecting what the offices think are
legally insufficient filings; and (2) from courts that have let filers, who have provided insufficient notice by
submitting faulty filings, off the hook for their errors. This has resulted in continued ignorance of the
requirements of the Code, causing bad filing habits to go uncorrected and unpunished.
The new Article 9-5 is purposely not so kind or forgiving. Effectively, the act says that the time has come for
filers to grow up and be responsible for meeting their legal responsibilities. These responsibilities include getting
the debtor name right, completing forms properly, and filing changes to financing statement information
accurately and timely. If filers cannot get those basic requirements right, it is not the responsibility of filing
offices, courts or subsequent searchers to bail them out.
(B) Searchers
Under interpretations of the prior Article 9-4, searchers have had to jump through too many hoops to find active
filings. Bankruptcy trustees, potential secured parties and their agents (the search companies), UCC database
providers, and filing offices themselves have had to come up with concepts like flexible searching, similar
name lists, and soundex search logic, to meet something called the reasonably diligent searcher standard.
The UCC drafting committee chose to eliminate all this costly puzzle solving on the part of searchers in favor of a
simple rule in the Article 9-5: the searcher has only to (1) get the debtor name right, just like the filer must, and
(2) review filings found in a search for legal sufficiency and effectiveness.
(2) Modified Role of Filing OfficesFull Disclosure and Rejection Criteria

In order to assure that this rebalancing is properly maintained in every filing office, it is necessary to modify
significantly the role of the filing office in administering Article 9-5.
Under Article 9-4 some legal issues, and virtually all administrative details of the UCC system, were left to the
discretion of the filing office, without even a requirement to explain to the users of the system how it operates in
that office. Under Article 9-5,
(1) responsibility for the interpretation of the legal issues of effectiveness and sufficiency of filings are left for
filers and searchers to understand and interpret, and
(2) administrative functions are standardized by statute, backed up by official, written administrative rules.
The Full Disclosure Concept
In order to keep responsibility for legal interpretation with filers and searchers, two conditions are necessary:
(1) specific rules must be stated for acceptance or rejection of filings, and
(2) searchers must be able to review all filings that have not lapsed. These two conditions are met by what is
called a full disclosure UCC system, which is fundamental to proposed Article 9-5.
A full disclosure UCC System under proposed UCC Article 9-5 is one that
(A) accepts all filings except those that are required by statute to be rejected,
(B) attaches all subsequent filings as records to the initial financing statement by filing number, and
(C) maintains debtor names on a searchable index of all financing statements that have not lapsed, including
terminated filings.
Recommendations
(A) Rejection Criteria
17

The kinds of filing errors that will cause rejection are the first part of the definition of full disclosure. The
principal considerations for the UCC drafting committee in identifying reasons for rejection were
(1) whether rejection or failure to reject will do any harm (known as the do no harm principle) to anyone
who subsequently searches the index, and
(2) whether the rejection can be determined objectively (meaning, these days, by computer logic).
A list of the permissible reasons for rejection appears in the table below.
(B) Records
Change filings, continuations and terminations, all of which are defined as forms of amendment, are generically
called records in Article 9-5. To our knowledge, all central filing offices except Colorado already attach
subsequent filings to the initial financing statement in the way contemplated under the full disclosure concept.
However, a change in the way recorders index assignments will be necessary to bring their grantor/grantee
indexes in conformity with Article 9-5 as explained below
(C) Searchable Index of Debtor Names
This indexing requirement is essentially no different from the design of

(1) virtually all existing UCC filing office UCC systemsexcept in its treatment of terminationsand
(2) virtually all existing recording office grantor/grantee indexing systemsexcept in the handling of
assignments.
(1) Handling Terminations in UCC Filing Offices
Article 9-5 considers whether a termination is effective against an active filing to be a legal issue, not an
administrative one as it is handled by UCC administrators today under Article 9-4. Therefore, UCC systems will
be required to maintain terminated filings on their debtor index until lapse. It has been observed that this
will mean more work for searchers in determining which filings are effective. Taken within the context of the
savings to searchers in puzzling out debtor name variations and the savings in litigation costs due to an improved
UCC filing system, this trade-off will be more than acceptable to the secured transaction community once these
fundamental principles of the proposed Code are properly explained to and understood by them.
Of course, index entries for terminations of realty-related filings have always remained on the grantor/grantee
indexes of recording systems.
(2) Handling Assignments of UCC Filings in Recording Offices
Section 9-519(c)(1) requires central UCC filing offices to index financing statements and records amending them
in a manner that associates with one another an initial financing statement and all filed records relating to the
initial financing statement. Although this language does not refer to recording offices, grantor/grantee indexes
still meet this requirement to the extent that debtor names (and record owner names) are indexed as grantors,
thereby associating all related filings by that name.
The specific language applicable to recording offices is in Section 9-519(d)(1) which says that financing
statementswhich include amendments under new Article 9must be indexed under the names of the debtor
and of each owner of record However, many recorders index assignment statements only by assigning secured
party (assignor) as grantor and assignee as grantee.
The argument that the debtor is not a party to the assignment and therefore should not be indexed is not
controlling for recorders. As the California Recorders Document Reference Manual, Introduction to Indexing,
states,
In most cases, it is left to the discretion of the recorder to determine the appropriate parties to index. The
majority of documents relate to real property. The property owner should always be identified and is
always one of the parties that is indexed.
All recording offices should therefore add this indexing directive to their procedures:
When indexing a UCC assignment, enter as grantor all of the following named parties: debtor(s), recorder
owner(s) and assigning secured party(ies).
18

(3) Media NeutralityNo Signatures
UCC filings do not require signatures under Article 9-5. This should encourage filing offices to offer, and filers to
use, electronic filing methods.
The input (filings) and output (search results) in all but a few UCC systems today are 100% paper based.
Electronic filing as an option, for example, is in its infancy. In Article 9-5, all references to the use of paper for
filings or search results have been replaced with the term communicate, defined in 9-102(a)(18), meaning in
part to transmit a record by any means In regard to filings, 9-516(b)(1) stipulates that the filing office can
authorize the acceptable method or medium of communication for that office. In regard to search results, 9523(b) stipulates that the filing office shall communicate the results (in a form useable by the requester, one
assumes).
Authentication
The elimination of the signature requirement on UCC filings does not mean that signatures have been eliminated
in secured transactions involving personalty. However, the concept of signature has been extended to clear up
some old misconceptions and to prepare for electronic commerce as well.
One of the problems with Article 9-4 is that the term signature was not defined. As a results, for example, filers
have not been using the electronic filing system in operation at the Texas secretary of states office for two years
now because they are afraid that some court will declare ineffective these electronic filings since they lack a
traditional signature. In new Article 9, the undefined term signature has been replaced by the defined term
authentication defined at 9-102(7), which has a broad meaning to include electronic signatures as well as marks,
symbols and other non-traditional methods of saying I am a party to the contents of this document.
Filing Safeguards
As noted in the chapter Real Estate and the Uniform Commercial Code, under UCC law, notices of agreements
are filed, whereas, under real estate law, original real estate documents are recorded. The underlying transaction
to a UCC filing is an agreement between the debtor and secured partyusually a security agreementwhich
the UCC filing merely summarizes. This underlying agreement is not only required to be authenticated to be
valid, but also new Section 9-509(a)(1) states that UCC filings are only effective if the debtor authorizes the
filing in an authenticated record; Just because there is a UCC filing on record has never meant that there is in
fact a real transaction behind it. The determination of the facts behind, and effectiveness of, any filing continue to
be the responsibility of the searcher.
As a recorder, you are sensitive to the issue of safeguarding the recording system against misuse. For example,
under real property law you review each document in order to determine that it contains a legible, complete
acknowledgment of each signature to the transaction. In this case, however, you are looking at the original
document, which permits you to make a reasonable judgment about the content of the transaction. You have no
such assurance when you review a UCC filing form . In fact, as mentioned above, the statute limits your review of
the form to specifically identifiable rejection criteria.
The real, new safeguard to misuse of the UCC filing system is the same as the safeguard that recorders have
always had in placea system of indexing that fully discloses all documents involving a named party. The only
difference under new Article 9-5 is that recorder indexing systems leave all filings on the index forever whereas
UCC filing systems delete the filings from the index after the financing statement has lapsed. According to the
full disclosure principle, (1) secured parties are protected from fraud and error because even if a wrongful
termination is filed, their financing statement will still appear in the index, and (2) searchers are protected from
fraud and error for the same reason since they will see on the index any filing that have not lapsed.
The issue of whether fraudulent filing of UCC forms should be criminalized is left outside the UCC.
(4) Debtor Empowerment

There are times under the prior Article 9-4 that debtors are powerless to fix errors in the records of filing offices
without a long and arduous process of going through the courts. Article 9-4 does not contain any procedure to
deal with the following situations, for example:
19

Recommendations

(a) Debtor cannot legally file a termination when she has paid off a secured transaction, but the secured party
is out of business.
(b) Debtor has no way of deleting a fling submitted by someone with malicious intent who is not an actual
secured party.
New Article 9-5 addresses this problem by giving each debtor the explicit right to file a correction to a financing
statements that she believes to be inaccurate 9-518(a) or which should be terminated 9-509(c)(2).
As noted above, secured parties are protected by the full disclosure indexing system from fraudulent terminations
by debtor or others.
Conclusion
New Article 9-5 contains many provisions that will change the respective duties and responsibilities of central
filing offices, recording offices, filers, searchers, and other interested parties. All parties will benefit from more
precise language and more comprehensive, standardized administrative rules and national standard forms.
To summarize:
(1) Filing Offices

Filing offices will be constrained to administering Article 9-5 rather than interpreting it. The addition of
responsibility for cooperation among central filing offices nationally in the promulgation of administrative rules
will lead to more national uniformity, greater efficiency and less litigation. The acceptance of the national
standard forms by all recorders will also assist in achieving the same goals.
(2) Filers
Filers will be held to a higher standard of due diligence in the preparation of UCC financing statements and
amendments thereto, while at the same time they will receive less help from filing offices because of the
explicit constraints on rejection of sub-par filings. However, filers who follow the requirements of prior law today
have no reason for concern.
(3) Searchers
Searchers will be held to a lower, more reasonable standard of due diligence than many courts have placed on
them under the prior Article 9-4 with respect to requests for UCC searches. As a result, a reasonably diligent
searcher will only be required to (1) get the debtor name correct and (2) to search the official debtor index using
the filing offices search logic. In addition, under the new full disclosure concept, searchers will have
responsibility to review search results to determine if purportedly terminated filings are validly terminated. This
trade-off should be welcomed by searchers.
The remaining hidden lien problem will, however, cause searchers to continue to expand their searches beyond
exact name.
(4) Bankruptcy Trustees

The proposed Article 9 will allow bankruptcy trustees to attack defective UCC filings with more confidence,
especially those containing debtor name errors.
(5) Debtors
For the first time, debtors will have a mechanism for notifying searchers of UCC errors that could affect the
debtors credit standing.
20

Chapter 5Specific Provisions of New Article 9-5 and 9-7
This chapter summarizes the provisions of new Article 9-5 and related sections of Article 9 that apply to filing
systems. For a complete copy of these sections of new Article 9, see the Appendices.
Definitions (9-102)
Each term used in Article 9 that does not have a readily understandable everyday meaning is explicitly defined in
this section. Terms that have under prior Article 9 caused misunderstanding and misinterpretation, such as,
signature, financing statement, and certify. The new Article 9 replaces signature with authentication,
defines financing statement to include all subsequent filings related to the original financing statement, and
replaces the term certify with communicate!
Place of Filing (9-301 through 307)

Generally, the proposed place of filing (perfection) for most forms of collateral is the state of
incorporation/registration for registered entities, the place of business for other business entities (or chief
executive office if the unregistered entity has more than one location) and the place of residence of individuals.
The only instances in which the nature of the collateral determines place of filing are (1) for realty-related
collateral (fixtures, timber and minerals) and (2) for certain types of agricultural liens (farm products).
Debtor Name (9-503, 506)

For a debtor name to be sufficient (and not seriously misleading), it must meet new, very specific rules. For
registered entities such as corporations, for example, the name must be stated on a financing statement exactly as
it appears on the public record for the state of incorporation (9-503) unless the name would be found in a search
of the filing office index using the search logic provided by that filing office (9-506). The word would should
comfort bankruptcy trustees as hypothetical judicial lien creditors, because judges should stop coming up with
lame excuses to give equitable relief to dumb filers just because trustees were not potential secured parties who
had done a search before bankruptcy occurred.
If the filing office makes an error when indexing the debtor name, however, a hidden lien is created, as discussed
in the previous chapter. It is incumbent upon recorders to design indexing systems that reduce to a minimum level
the chance for indexing errors.
Termination Treated as an Amendment (9-513)

What are today separately known as amendments, terminations and continuations are all redefined to be forms of
amendments. Amendment records remain on the index until the related filing lapses in UCC filing offices and
until forever on grantor/grantee indexes in recording offices. Therefore, termination statements will no longer
result in removal of the filing from the debtor index in UCC filing offices, placing an additional responsibility on
the searcher to review these filings to make a determination whether they are in fact terminated. Since only 2030% of filings are terminated rather than just being allowed to lapse, this responsibility is more than offset by the
overall decrease in searcher responsibility under the proposed Article 9-5.
Searcher Responsibility (9-506)

To be protected as a future secured party against a previous filer who gets the debtor name wrong, a searcher is
only required to get the debtors legal name correct on a search request because the minor errors section (9-506)
specifically relieves the searcher of responsibility to search alternative names. In order to take advantage of this
provision, however, the search must be conducted on the filing office database using the filing office search logic.
This provision should resolve the confusion many courts exhibit in their opinions about whether a registered
entity debtor name is sufficient.
Recommendations
21

Searching for unregistered entities and individuals will still require some searcher ingenuity because there is no
independent source from which to verify correct legal name. Additional due diligence may also be necessary to
unearth hidden liens, as discussed in the previous chapter.
Debtor Rights (9-509, 518)

Debtors are given some rights under new Article 9-5. Section 9-509(c)(2) allows a debtor to terminate a filing if
the secured party should have, but fails to do so. This provision has to be understood within the context of the full
disclosure fundamental principle, that is, it is up to a later searcher who finds such a termination on the record to
make her own legal determination whether the termination statement is properly filed and effective.
Section 9-518 gives a debtor the right, analogous to a consumer right under the Fair Credit Reporting Act, to
place a statement of correction on the record when the debtor believes that information on a filing is inaccurate
or wrongfully filed.
Secured Parties (9-503, 9-509, 9-510, 9-511)

New Article 9-5 clarifies three issues related to secured parties:
(1) Only one secured party needs to be listed on a financing statement, even if there are in fact multiple secured
parties. The listed secured party effectively acts as the representative of the other ones (9-503(d)).
(2) If multiple secured parties are listed on a financing statement, an amendment by one applies only to that
secured party and not to any others (9-509(d) and 9-510(a)).
(3) Secured party of record is defined in 9-511.
Amendment Filing Requirement (9-512)

When filing an amendment, including a continuation or termination, the only identification required to attach the
amendment to the original financing statement in a UCC filing office is the file number. Amendments filed in a
recording office, on the other hand must include a number of additional details according to 9-512(a) Alternative
B:
(1)
(2)
(3)
(4)
Debtor name(s) from original financing statement or from latest prior amendment.
Secured party name(s) of record.
Type of collateral (probably only required when there is a change from what is on original.
Description of real property to which filing is related.
Recorders must remember in reviewing amendment filings that,

The only reasons for which a UCC filing can be properly rejected are those enumerated in Section 9516(b).
What Constitutes Filing/What May Be Rejected (9-516, 517, 520)

The prior Article 9-4 dismisses this subject with 24 words in 9-403(1), Presentation for filing of a financing
statement and tender of the filing fee or acceptance of the statement by the filing officer constitutes filing. New
9-516 basically keeps this concept, but then goes on to designate the only reasons for refusal to accept a filing by
a filing office. The acceptable reasons for rejection stated in 9-516(b) are as follows:
22

Acceptable Reasons for Rejection
Type of Filing
1. All
2. Allrealty related
collateral
3. Original financing
statement only
4. Any amendment
5. Debtor name change
amendment
6. Amendment that adds a
debtor name
7. Amendment that adds a

secured party
8. Correction statement
[Amendment in land
recording row deleted]
9. Assignment on an original
financing statement or on a
statement of assignment
10. Continuation statement
Reason for Rejection

(1) Failure to submit by a method or in a medium acceptable to the filing
office
(2) Failure to include at least the amount of the correct fee
(3) Content necessary to index is illegible
(4) No secured party name and address
(5) No last name for individual debtor, if applicable
(1) Does not indicate that it is to be recorded in real property records2
(1) No debtor name
(2) No debtor mailing address*
(3) No indication whether debtor is individual or organization*
(4) No indication of type and state; or identification number1 (Indicate
none if none) for registered entity*
(1) Illegible initial filing number, or none indicated
(2) Filing has lapsed
No new debtor name
(1) No new debtor address*
(2) No indication whether debtor is individual or organization*
(3) No indication of type and state; or identification number1 (indicate
none if none) for registered entity*
No secured party name and address for new secured party
Does not indicate it is a correction statement
Does not provide basis for correction
No assignee secured party name and address
Not filed within six (6) months before lapse date
24

Note 1The identification number referred to here is not the federal employer identificaton number or social
security number as under the prior Article 9 of some states, but rather the number assigned to the organization by
the state government agency that creates the organization by accepting a filing of organizational documents or by
issuing a certificate of organization.
Note 2Although there are a number of special errors and omissions that can make a realty-related filing
insufficient under 9-502(b), the only one that allows rejection is lack of the real property description.
As a recorder, you must be aware of three considerations when you reject a UCC filing:
1. Rejection of filings for any of these reasons is mandatory, except that rejection for the reasons marked
with an asterisk (*) is optional.
2. A filing that you accept even though its contains one of the enumerated defects is not going to be legally
perfected, unless the errors it contains are among those marked with an asterisk (*) above or are
minor.
3. A filing that you reject for any reason not stated is still perfected, even though it does not appear in
your index, except as against a good faith purchaser of the collateral under 9-516(d).
See Rejection Criteria and Hidden Liens in Chapter 6 for discussion of the ramifications of these two facts.
Note also that overpayment of fees is not a valid reason for rejection under new Article 9-5. (See chapter on
Optional Article 9-5 Language for recommended wording.)
In addition, any filing mis-indexed by a recorder is still effective (9-517), protecting secured parties against
your errors.
If a filing is rejected, the filing office has two business days from the date of receipt to return the filing with the
reason for refusal (9-520(b)). Recording offices may be exempted from this provision through optional language,
although the words are not provided in the model act. (See chapter on Optional Article 9-5 Language for
recommended wording.)
Duration of Effectiveness and Continuation (9-515)

Under Section 9-515 filings are effective for five (5) years unless continued within six (6) months of lapse date,
just as they are under prior Article 9-4 (except in Maryland12 years, Puerto Rico10 years and Arizona6
years). The three exceptions to the five (5) year rule are given:
(1) Transmitting utility filings remain effective until terminated (same as prior law).
(2) Public finance and manufactured home transaction filings are effective for 30 years.
(3) Mortgages effective as fixture filings are effective until satisfied (same as prior law).
Forms Acceptance and Forms (9-521)

All fling offices, including recording offices, must accept the national standard forms illustrated in Appendix VII.
Initial Financing Statement

Proper filing of an initial financing statement in a recording office requires two pages minimum, in addition to the
usual data:
(1) UCC financing statement item 6 must be checked, which states that the financing statement is to be filed in
the real estate records, and
(2) UCC financing statement addendum includes
(a)
item 13, specifying the type of realty-related collateral,
(b)
item 14, a description of the real estate, and
(c)
item 15, the names and addresses of record owners if different from the debtors.
Amendment
Proper filing of an amendment in a recording office requires, in addition to the usual data,
Comment [CRE1]: This paragraph is

incorrect. Recorder is allowed to reject as
long as 9-512 Subsection (a) Alternative
B is enacted.

(1)
(2)
(3)
(4)
entry of the date ot the initial financing statement in addition to the file number in item 1a,
checking item 1b, which states that the amendment is to be filed in the real estate records,
entry of secured party name in item 9, and
entry of debtor name in item 10
Filing Office Operations (9-519 through 527)

In addition to the responsibilities we have enumerated above, the following provisions impact filing office
operations:
(1) The format of filing number assigned by each filing office is specified (9-519(b)). The format includes the
date of filing, which is necessary because other sections of the law only require file number to be included on
amendments. This requirement does not apply to recorders if optional 9-519(I) is enacted.
(2) Rejected filings must be returned within two business days of receipt, and must indicate the reason for
rejection (9-520(b)). There is no exemption from this requirement for recording offices.
(3) All filing offices must accept the national standard forms (9-521(a) and (b)).
(4) On request and within two business days, a filing office must perform searches and provide the resulting
information or images of forms (9-523(c)). Recording offices may be optionally exempted from the two day
requirement, but the language to accomplish this is not included in the model act.
(5) Filing offices must also provide to the public, at least weekly, copies of the index and forms on file in all
media used by the filing office (9-523).
(6) Each filing office must adopt administrative rules to carry out the provisions of Article 9-5, after consulting
with other filing offices that have enacted Article 9, and after consulting the model rules promulgated by the
International Association of Corporate Administrators, which is the organization representing central filing
officers nationwide (9-526). Optional language may be added to exempt recording offices from this
requirement.
(7) Each filing office must report periodically on the operation of its office, including details of its compliance
with time limits stated in the act and details of any difference between its administrative rules and the model
rules (9-527). Optional language may be added to exempt recording offices from this duty.
Transition ProvisionsPart 7
New Article 9 will be introduced in most state legislatures in late 1998 and early 1999. In order to give all the
state time to enact the legislation and to give the UCC administrators time to alter systems and programs, the
transition period will encompass the full five year term of a regular UCC filing (6 years in Arizona and 12 years
in Maryland unless they change to the national standard).
When a fling comes up for continuation, it will be continued under the new Article 9 in the new proper place of
filing either as a continuation or as a special type of new financing statement under Sections 9-705 or 706. This
transition rule will not impact realty-related filings.
Searchers will need to search in both the location determined by the prior Article 9 as well as the new Article 9
until June 30, 2006, assuming all states enact the model act with the proposed effective date of July 1, 2001.
A form of dual filing for certain types of new transactions may be in effect if not all states enact the new Article 9
effective July 1, 2001. For example, if equipment located in an old Code state is collateral for a loan to an entity
registered in a new Code state, filing would be required in both states. Searchers will need to be aware of this
possibility in determining where to search.
See Appendix IV for the actual language of Part 7.
26

Chapter 6Issues For Recorders
During the ten year, ongoing process of developing the new Article 9, the following issues have been raised in
various forums by recorders. The current status of each of these issues, and where appropriate the position of the
Task Force, is as explained below.
1. National Standard Realty-Related Filing Form

The task force is considering whether to design UCC forms that are specifically geared towards the indexing
needs of recording offices. If a decision is made to go forward, all state recorder associations will be included in
the process.
2. Revenue Neutrality
Even though the operations of most recording offices are paid out of general funds and funded with considerably
less than the fees that recorders collect on behalf of the county, town, parish or district, recorders still take
seriously their responsibility for providing funds for local government operations. Therefore, there is a real
concern in those states, listed in Appendix V, where certain types of filings will no longer be submitted to their
offices.
This concern is especially significant in the following nine (9) states that still have dual filing systems under the
prior Article 9. The chart indicates the fee applicable to a single debtor local UCC filing as of September 1998.
State
Arkansas
Massachusetts
Missouri
Mississippi
North Carolina
New York
Ohio
Pennsylvania
Virginia
Basic Filing
Fee
$12.00
10.00
12.00
5.00
15.00
7.00
9.00
57.50
10.00
The worst case total central/local fee for a one debtor financing statement in a dual filing state is $69.50 in
Pennsylvania. The success of the Pennsylvania local fee teaches that just about any fee, no matter how
unreasonable, does not seem to have a negative impact on the number of secured transactions in a state. The
matter of whether such outrageous fees are legal will be left to class action attorneys.
There are a number of ways that revenue neutrality can be achieved in states that still have dual filing or local
farm-related collateral filing:
(1) Increase central filing office fee and share increased with recording offices.
(2) Increase recording fees to offset lost revenue.
(3) Turn all UCC filing over to local filing offices under the administration of a central state system
administrator.
Of course, any analysis of lost revenue should also take into account decreased costs and overhead associated
with not having to deal with personalty filings, including the costs of employee training and system maintenance
related to a separate UCC index, which is no longer required in any recording of local UCC filing office.
Annual Net Revenue Neutrality Worksheet

Many recorders do not keep detailed records that would allow direct computation of estimated reduction in fees
from the elimination of dual filing or farm-related filing. Here is a convenient way to look at the numbers in a
way that most offices can put together:
27

Recommendations

A. Total Number of UCC Filings .........................................................__________
B. Less: Realty-related Filings .............................................................__________
C. Net Reduction in UCC Filings.........................................................__________
D. Total UCC Fees .............................................................................$__________
E. Average Fee (D/A)
$__________
F. Less: Realty-related Filings Fees (E*B)...........................................__________
G. Gross Loss in UCC Filing Fees (D-F) ...........................................$__________
H.: Less: Estimated Cost Decrease.......................................................__________
I. Net Revenue Decrease ...................................................................$__________
J. Number of Real Estate Document Recorded ....................................__________
K. Lost Net Revenue per Real Estate Document (I/J) ........................$__________
Item K is the amount by which your recording office would have to increase real estate document fees per
document to make up the lost net revenue, if there is in fact any lost net revenue after considering reduced
expenses.
If your state aggregates this worksheet data for all counties, you can then make the following computation of the
amount by which central UCC filing fees would need to be raised to accomplish the same goal of revenue
neutrality:
J. Aggregate Net Revenue Decrease (all recording offices)...............$__________
K. Total Number of Central Office UCC Filings .................................__________
L. Lost Net Revenue per Central Office UCC Filing ........................$__________
3. Signatures on Forms
Recorders are used to reviewing signatures on documents. The lack of a signature on a document is unacceptable
to all recorders today. However, recorders do understand that UCC forms are different from real property
documents in that they do not require acknowledgment of signatures. New Article 9 takes this difference one step
further. There is no requirement for signatures on any UCC form. As noted elsewhere this does not mean
signatures are not required under the Code, but rather that the requirement applies to the underlying security
agreement, not to the UCC notice form. Among the advantages to the elimination of signatures is the
encouragement of efficient electronic filing in central filing offices.
As explained elsewhere in this Guide, safeguard are in place under Article 9-5 to protect all parties from
fraudulent filings and from attempts to fraudulently terminate filings.
4. Rejection CriteriaDanger Zone For Recorders

As outlined above, Section 9-516(b) specifies the only acceptable reasons for a filing office to reject a filing. As
part of effectuating the second fundamental principle of the new Article 9-5Role of Filing Officesthis set of
rejection criteria are specified with the purpose of reducing rejections to a minimum.
For example, the way Alternative A of new Article 9-516(a) reads, a filing office may not reject an amendment
that fails to include the original debtor name. This presents less difficulty to central filing offices that administer
UCC filing systems than it does to recording offices. For central filing offices in most states, the amendment will
attach to the financing statement because their UCC filing systems, unlike recording office grantor/grantee
indexing systems, attach by filing number. And, under subsection 9-519(b) the central office filing number will
contain a check digit, making it more unlikely that an amendment will be applied to the wrong financing
statement even though the debtor names are no longer compared by the filing office. However, a recording office
cannot record an amendment without the debtor name. This problem is resolved for recording offices by choosing
Alternative B for 9-512(a), as recommended in Chapter 7, Optional Article 9-5 Language Pertaining to
Recording Office Operations.
28

The chart of acceptable reasons for rejection of a UCC filing include three that are given special treatment under
9-516(b)(5): the mailing address of the debtor, an indication of whether the debtor is an individual or an
organization, and if it is an organization, the type, jurisdiction and/or identifying number of the organization or
indication that there is none. According to 9-520(a), rejection for these reasons is optional for the recording office,
but, according to section 9-338, a future secured party or purchaser is given priority to the extent that, in
reasonable reliance upon the incorrect information.
For those recording offices that cannot accept overpayments, see the recommended language to add to 9-516(b)(2)
in Chapter 7.
In addition, 9-520(a) requires rejection of continuation statements that are not within the six (6) month window.
Recording offices generally do not make a determination about continuations because they do not compare one
filing to another. Therefore, filers should not anticipate that an improperly filed continuation will be rejected by a
recording office.
5. Too Much Money

As a recorder, you must be aware that if you reject a UCC filing because it is submitted with too much money you
will have created a hidden lien. Yet many recorder are by law restricted from accepting overpayments.
See the chapter Optional Article 9-5 Language Pertaining to Recording Office Operations for language that will
resolve this problem for you.
6. Hidden Liens
The Problems
There are four ways that a filing office can screw up badly in the process of accepting and indexing a filing under
new Article 9-5:
(1)
(2)
(3)
(4)
It can reject a filing that it ought to accept.

It can accept a new financing statement and mis-index the debtor name.
It can accept an amendment and attach it to the wrong financing statement.
It can accept a filing and then lose it (fail to index it at all).
In all of these cases, there exists a hidden lien, since a search under the correct debtor name will not unearth the
filing. The hidden lien may be effective against some actual or hypothetical parties, such as :
(a) Subsequent secured party with same collateral,
(b) Purchaser of collateral, and
(c) Bankruptcy trustee
In case (1), Section 9-516(d) holds harmless the purchaser of collateral who diligently searches the index and fails
to locate the filing, since it had not been accepted. (The onus is on the secured party to get the filing accepted by
the filing office pronto.) A subsequent secured party however is at risk from the hidden lien.
In cases (2) and (3), Section 9-517 reads, The failure of the filing office to index a record correctly does not
affect the effectiveness of the record. The same diligent purchaser mentioned above is not protected in this case.
Thus a purchaser who diligently searches the index and fails to locate a filing because the filing office wrongfully
refused it is protected, while that same diligent purchaser is unprotected if that same filing office cant get its
indexing right.
A subsequent secured party is also at risk in cases (2) and (3). (More on this result below.)
In case (4), it is not clear whether Section 9-517 applies. Does the phrase failureto indexcorrectly include
not indexing at all? It can be reasonably argued that treating this case according to the rule in 9-516(d) is more
equitable than the rule in 9-517.
In all these cases, it appears that a secured partys hidden lien usually trumps both (1) a subsequent secured party
29

Recommendations

with the same collateral and (2) a trustee in bankruptcy.
The Dangers
How dangerous is each of these filing office errors? Lets take another look at each one:
(1) Under Section 9-520, UCC filing offices are required to reject filings within two business days of submission.
Therefore, there will not usually be a long period of time during which the case (1) hidden lien exists, so it is
highly unlikely that any other lender would be harmed by not knowing about the filing. Assuming your state
has enacted the Task Force recommended version of 9-520, which makes your recording office exempt from
the two day rule for turnaround of rejected filings, you still have an ethical responsibility to return rejections
timely so that the secured party can correct and refile quickly. Although there is no responsibility placed on a
recorder in this instance beyond stating the reason for reject when returning the filing, Bob Henderson,
Director of Legal Records in Jefferson County, KY, has suggested a unique idea to avoid this type of hidden
lien: add an item to the general index stating the debtor and creditor name, the type of document (e.g., UCC1) and the reason for the rejection. (Such an approach might also be helpful to inform the public of real estate
documents that have been received but not recorded.)
(2) A mis-indexed filingcase (2)may remain hidden on the UCC index for five or more years. New Article 95 is silent as to the liability of a recording office for mis-indexing a UCC filing. Since a subsequent secured
party has no protection under the revised Article 9-5 against this type of error, it will still be necessary for the
smart searcher to look for debtor name variations. In other words, the unreasonable reasonably diligent
searcher standard is still alive and well to some extent under revised Article 9-5.
(3) Attachment of an amendment filing to the wrong financing statementcase (3)is an especially insidious
error since the only party who can find it is the filer. This type of error can only occur in a UCC filing office,
not in a recording office. If this error is perpetrated by the filer (entering the wrong original file number on the
amendment), a subsequent secured party is protected because the amendment would be seriously misleading
under Section 9-506. If, on the other hand, the error is caused by the filing office, the position of a subsequent
secured party is compromised because, although the amendment is effective, there is no way a search, no
matter how ingenious the searcher, will unearth the amendment.
(4) If a filing is accepted, lost and not indexedcase (4)the filer will not receive an acknowledgment. After a
short period of time, it is reasonable to expect the filer to contact the filing office (with the canceled fee check
in hand). The filing office will then be forced to determine that the filing was lost and will then, one assumes,
accept a copy and enter it on the index. As in case (1), it is highly unlikely that any other lender would be
harmed by not knowing about the filing.
Thus, in cases (1) and (4) only a short period of time will elapse between the error and the correction. The danger
of an intervening secured party or bankruptcy trustee is miniscule. In case (2) in a recording office, however,
there is a real danger of affecting the position of a subsequent secured party, purchaser, or trustee because
the error can remain on the records of the filing office until the original financing statement lapses.
It may seem that filing office mistakes constitute an issue different from the first principle of Article 9-5, that
secured parties must get debtor names right in the first place rather than placing the onus on searchers to be
creative in finding misnamed filings. However, it is possible to give the secured party the information necessary
to determine if the filing office has made a mistake.
Section 9-523 requires filing offices to send acknowledgements to filers, basically in the same manner as they do
today. A growing number of central filing offices now send back (1) images of the form and (2) a print out of the
information entered from the form.
If new Article 9-5 required the acknowledgment to include this information entered by the filing office, the
secured party would then be able to compare this information to its filing, and to report any discrepancy
immediately to the filing office for correction.
30

The print out from a recording office would highlight the names entered into the grantor/grantee index, With this
disclosure in place, subsequent searchers can better rely on a search under the debtors correct name, utilizing the
filing offices standard search technique (9-506) to find all effective filings.
Would secured parties welcome this type of acknowledgment? If you consider that every secured party is also a
searcher who wants the UCC index to be correct, there is every reason to believe that they will willingly approve
the responsibility to check the acknowledgment for these two errors.
7. Liability of Recording Office

There are three areas of concern to recorders about liability for their actions with respect to UCC filings:
(1) Failure to index a debtor name accurately,
(2) Wrongful rejection of a filing for some other reason than those enumerated in 9-516(b).
(3) Failure to reject a filing for one of the reasons enumerated in 9-516(b), and
It is reasonable to assume that in the first instance that the liability, if any, of a recording office is the same for
UCC filings as it would be for real estate documents
Wrongful rejection is probably not a high-potential problem because the submitter can fix the problem and get the
filing filed quickly. On the other hand, a filing that contains one of the critical errors but not rejected will remain
on the record of the office until it lapses. If a bankruptcy trustee determines that the filing was not perfected
because of the error, a liability issue may arise.
In addition, those recording offices that conduct searches for the public may also have a liability issue if the
results of the search are for any reason not correct.
Our recommendation is to obtain from the Attorney General of your state an opinion regarding recorder liability
under the statutes of your state.
8. Indexing
Recorders should be aware of two elements of indexing that have not been well defined in the past.
Record Owner Names

First, under both the prior Article 9 and the new one, it is necessary for a recorder to index all the debtor and
record owner names from a financing statement. The first debtor name and possibly the first record owner name
will appear on the first page of a UCC form. However, more debtors and record owners may be named on an
attachment. Therefore, it is essential for the recorder to read the attachments for such names. The indexing of
record owner names is an example where the grantor/grantee index contains the name of someone who is not a
party to a document. The reason it is necessary to index the record owner name is so fixture collateral on the
property of the property owner will be distinguishable by a searcher from the property of the owner. Under the
new Article 9, the record owner names on an initial financing statement appear on the addendum form. Heres an
example of why record owner name indexing is important:
Lets say that Tenant A leases an entire building from Owner B, and installs a telephone system throughout the
building. Tenant A borrows $100,000 from Bank C to buy the telephone equipment. Bank C files a fixture filing
with your office, listing Tenant A as the debtor and Owner B as the record owner. Owner B goes to Bank D to get
a new mortgage on the building. How does Bank C let Bank D know that Bank C has the telephone system as
collateral for the loan to the tenant, and that the equipment, wires, etc., are not a part of the building? One of the
ways Bank D will know that is from a search of the grantor index in the recording office because the recording
office indexed the fixture filing under Owner Bs name.
Debtor and Record Owner Names on Statements of Assignment
Second, under new Article 9, it is required to index assignments by debtor name as a grantor in addition to the
assigning secured party. This is necessary so that a searcher on debtor name can tell when an assignment is related
to an initial financing statement. It is frequently impossible today (late 1998) in some recording offices to match
31

Recommendations

an assignment to an original financing statement (or mortgage) using just the grantor/grantee index because of the
way the grantor/grantee index is posted from statements of assignment.
A UCC filings is comprised of an original financing statement plus all the amendments, continuations, release,
amendments, and terminations applicable to it. In a UCC system, all these forms are related by computer software
based on the original filing number. In a grantor/grantee indexing system, most of these forms are also related, not
by a number, but rather by the fact that the debtor and record owner names will be indexed from each form filed.
Therefore, in most cases, a search on one debtor or record owner name will reveal all the filings that go together,
with one exceptionif your offices does not index the debtor or record owner name from a statement of
assignment the chain of filings is broken.
In that case, how can you determine whether any given financing statement secured party has assigned the loan to
another? Your only option is to sort through all the instances of the original secured partys name on the grantor
index to see if one of those assignments is for the debtor name you are searching. If the original secured party is a
large financial institution with lots of assignment filings in your office, you have no chance of ever finding the
assignment.
But, some recorders may say, the debtor and record owner are not a party to the assignment, so they should not be
indexed as grantors. It is not necessary for a party to fit the legal definition of grantor or grantee to appear in the
index. The overriding consideration is whether a searcher will find the information on the index about transactions
of a debtor. Consider that a record owner is not a party to a UCC transaction yet is indexed as a grantor for any
transaction on which the record owner is identifiedfor the reasons given above.
32

Chapter 7Optional Article 9-5 Language
Pertaining to Recording Office Operations
In the previous chapter we summarized the provisions of new Article 9. A number of these provisions impact
recorder operations. In some cases the new model act provides specific alternative language to make the statute
match to recorder operations; in other cases optional language is provided or at least suggested, and in a few cases
optional considerations for recorders are mentioned but no language is provided.
In this chapter we discuss the particulars of each of these provisions as they effect recording offices (not as they
affect central filing offices), including suggested language where the model act does not provide it.
In General
1. A recording offices is referred to in Article 9-5 as a filing office described in Section 9-501(a)(2), which is
the office designated for the recording of a mortgage.
2. Where the statutory language indicates something like filed [for record], the bracketed language is said to be
optional. The language choices given below are recommended for states that have the usual grantor/grantee index
and which enter realty-related UCC filings into that index. If the state has some form of special fixture or other
separate index, the recommended language will need to be altered to reflect that practice or procedure. Appendix
VIII will contain state variations to the following recommendations.
Task Force Recommendation: In those states where the realty-related UCC filings are indexed in the
grantor/grantee index, choose the optional terms filed for record and filed or recorded where they appear.
9-502 Contents of Financing Statement

IssueShould type of collateral and description of real property be required on all filings, or just on initial
financing statements?
The reference in 9-512(a)(2) Alternative B, the requirements of 9-502(b) would apply to amendments as well as
initial financing statements. This would mean that amendments, including all assignments, continuations and
terminations would be required to restate the collateral and include the property description. Also, there is no
indication on the national UCC amendment form that such
Task Force Recommendation
(a) Since the property description is attached to the original filing, there is no additional If it is desired to keep the
requirement for property description with all filings, but
9-512 Amendment of Financing Statement

Issue 1Choice of two alternatives for subsection (a)
Is the date of the initial financing statement to be required on an amendment? Alternative A does not require the
date filed of an initial financing statement to be stated on an amendment. (Remember that under the New Article
9, the definition of amendment includes every type of subsequent filing (e.g., change, termination or continuation)
related to an initial financing statement.)
Task Force RecommendationIf the recording offices in your state use an indexing system that requires date as
well as filing (document, or book & page) number:
(1) Choose Alternative B for subsection (a).
(2) In Alternative B, choose filed for record for the reason stated above.
(3) In Alternative B, delete the words and time unless recording offices in your state require stating time on a
subsequent filing.
9-516 What Constitutes Filing; Effectiveness of Filing

Issue 19-516(b)(2) requires acceptance of a filing if the amount of the fee tendered is equal to or greater than
the applicable filing fee. There is no requirement that a filing office return an overpayment. Separate statutes is
33

Recommendations

some states or restrictions in local recording office systems may not allow acceptance of greater than fees. The
problem for a recorder who ignores this provision is that the filing will still be effective under subsection 9-520(c)
even though it has been rejected, thereby creating a hidden lien. On the other hand, it is likely that the filing will
be refiled in a very short time, so the hidden lien will not be in existence long.
Task Force RecommendationLeave the statutory wording as is. However, if recorders in your state feel
obliged to change the language to exempt recording offices from having to accept overpayments, add the
following to the end of 9-516(b)(2) before the ;: , except if the filing office is one described in Section 9501(a)(2), in which case only an amount equal to the applicable filing fee is not tendered
Issue 29-520(a) requires rejection of item 9-516(b)(7) , a continuation filed outside the six (6) month window.
Recording offices do not check for this.
Task Force RecommendationNo change recommended. There is no liability under the UCC for accepting a
filing that should have been rejected under 9-516. This type of filing is not effective under 9-510(d), whether or
not it is accepted by a recording office.
Issue 3There is no requirement that an amendment contain the name of the debtor and/or record owner.
However, upon the request of the Task Force, the instructions to the national standard amendment form have been
changed to state that debtor and record owner name(s) are to be included on the amendment addendum form.
Task Force RecommendationNo change recommended. A filing submitted without a debtor and/or secured
party name should be rejected.
9-518 Claim Concerning Inaccurate or Wrongfully Filed Record

IssueChoice of two alternatives for subsection (b)
The issue is the same as in 9-512, but for correction statements rather than amendments.
Task Force RecommendationIf the recording offices in your state use an indexing system that requires date as
well as filing (document, or book & page) number:
(1) Choose Alternative B for subsection (b).
(2) In Alternative B, choose filed for record for the reason stated above.
(3) In Alternative B, delete the words and time unless recording offices in your state require stating time on a
subsequent filing.
9-519 Numbering, Maintaining, and Indexing Records; Communicating Information

Contained in Records
Issue 1Choice of two alternatives for Subsection (f):
Both alternatives require indexing by debtor name. In addition, alternative A assumes that the file number is
indexed and, being unique for every filing, is itself adequate to search the index by filing number. Alternative B
assumes that both the filing number and date are needed to search the index by number.
Task Force Recommendation:
(1) Choose Alternative B as it would not require recording offices to change their numeric indexing methods,
whatever they may be.
(2) In Alternative B, delete the words and time since the time of acceptance is never an element of a search.
(3) In Alternative B, choose filed or recorded for the reason stated above.
Issue 2Addition of Subsection (i)
This optional subsection excludes recording offices from application of subsections (b) and (h). The first
subsection (b) requires a specified format of file number, and the second (h) requires indexing and other tasks
enumerated in 9-519 to be performed within two days.
Task Force Recommendation: Add subsection (i) to exclude recording offices from these requirements. The
filing number requirement is intended to create more standardization at the central filing office level among the
states. These filing offices do not follow the typical book & page format of recording offices. Any constrains on
turnaround time in recording offices should be dealt with by recording statutes, not the UCC statute which only
affects 1-2% of recording office intake.
34

9-520 Acceptance and Refusal to Accept Record
Issue 19-520(b) give a filing office two business days after receipt of a UCC filing to reject it.
Task Force RecommendationAdd a subsection (e) stating, A filing office described in Section 9-501(a)(2) is
not required to conform to the two business day constraint specified in subsection (a).
Issue 2Can a recording office decide not to refuse filings that call for rejection under 9-516(b)?
Two items are mentioned under the discussion of 9-516 above, the overpayment problem and the six (6) month
window problem. The recommendations for each are noted there. There is no statutory requirement that obliges a
recording office to reject any filing it wishes to accept. The legal sufficiency of the filing does not appear to
depend on whether it is accepted by a recording office.
Task Force RecommendationNo change required.
9-522 Maintenance and Destruction of Records

IssueChoice of two alternatives for Subsection (a):
In conjunction with the requirements of 9-519 above, both alternatives require making indexes by debtor name
and filing number available for at least one year after lapse date. The difference between the two alternatives is
that Alternative B accounts for an indexing system in which the access to a record by filing number also requires
date to be entered., whereas alternative A assumes that the file number is indexed and, being unique for every
filing, is itself adequate to search the index by filing number. Alternative B assumes that both the filing number
and date are needed to search the index by number.
Task Force Recommendation:
(1) Choose Alternative B as it would not require recording offices to change their numeric indexing methods,
whatever they may be.
(2) In Alternative B, delete the words and time since the time of acceptance is never an element of a search.
(3) In Alternative B, choose filed or recorded for the reason stated above.
9-523 Information From Filing Office; Sale or License of Records

IssueShould recording offices be required to perform searches, and if so, should they be required to perform
them within two business days of receiving the request? Separately, should recording offices be required to sell
UCC filing indexes and record copies in bulk?
The great majority of recording offices do not perform searches, but rather make the indexes and records available
to the public in some form such as remote online access (including more and more through the Internet) and inoffice terminals.
Any separate requirement to sell indexes and copies of UCC filings alone makes little sense because they are
intermingled with real estate documents. Therefore, this issue should be deferred to real estate law.
Task Force Recommendation
9-525 Fees
IssueDo UCC fees apply to realty-related UCC filings?
Task Force RecommendationWhether the UCC fee schedule or the real estate fee schedule is used in any state
is generally a settled issue in that state, and therefore need no further clarification in the new Article 9.
9-526 Filing Office Rules

IssueDoes this section apply to recording offices?
This section requires the inserted agency name to promulgate and publish its rules for accepting, indexing and
searching UCC records.
Task Force RecommendationMake sure that the designated agency is the central filing office.
9-527 Duty to Report

Recommendations
IssueDoes this section apply to recording offices?
35

This section requires the inserted agency name to report certain information regarding operation of the UCC
system in the state to the governor or legislature.
Task Force RecommendationMake sure that the designated agency is the central filing office.
36

Chapter 8Reading the National Standard UCC Forms
[NoteWhile reading this chapter, have in front of you the national standard forms illustrated in Appendix VII]
This chapter explains the fields on each of the four standard forms. These forms are required to be accepted in
addition to any forms promulgated for your state under Section 9-521. The intention of this section is to override
the proliferation of forms by state during the past 20 years by assuring that the national standard forms will have
national acceptance. In fact, as of the end of 1998, most state central filing offices accept as standard the interim
version of the national financing statement. The interim version of the national amendment form has just been
approved, so it is too early to tell yet whether it will also gain that level of universal acceptance at the state level.
In a number of states, led by the big four of California, Texas, New York and Florida, the interim national
financing statement is also accepted as standard by most counties as well.
The four forms are:
1. National UCC Financing Statement UCC1
2. National UCC Financing Statement Addendum UCC1Ad
3. National UCC Financing Statement Amendment UCC3
4. National UCC Financing Statement Amendment Addendum UCC3Ad
The procedure for indexing these forms in a grantor/grantee index is summarized at the end of this chapter.
General Design
Substantial space has been set aside at the top of all the forms for recording information. Also, both the financing
statement and include places for the a contact name and telephone number and for the return-to information. The
bar code is for use with certain imaging equipment. The fields for entry of names are designed to assist filers in
getting names right for proper entry into your indexing system, and to assure that filers include both information
required by statutes, as well as other information useful to later searchers.
There is no space for signatures as they are no longer required under Article 9.
Each form has written instructions that refer to each specific field to guide the preparer. You should read these for
details about what is expected to be in each field. In the next sections will be outlined specific information about
various fields that is of particular interest to recorders.
National UCC Financing Statement UCC1

1/2 Debtor Name InformationSeparate fields are provided depending upon whether the debtor name is for an
organization or individual. The individual name boxes are designed to help the preparer get the name right for
indexing. Recorders should be able to enter the names just as they appear without having to guess at which name
is the individuals last name.
Although the taxpayer identification number is not a required field under new Article 9, a box has been left for it
in case the preparer wants to use it to help identify the debtor.
The information to the right of the taxpayer identification number represents one of the most significant changes
regarding debtor names in the new Article 9. If the debtor entity is an organization, section 9-516 allows you to
reject a financing statement that does not have items 1e, 1f or 1g filled in (although the financing statement is still
legally sufficient if the fields are not filled in). The importance of these fields arises from the principle in new
Article 9 that financing statements are to be filed (except in the case of realty-related collateral) where the debtor
organization is registered or domiciled. These fields indicate
(1e) Type of OrganizationThere are many different types, such as, corporation, LLC, LLP, general
partnership, trusts, etc.
(1f) Jurisdiction of OrganizationThis is the state where the organization is either registered, as in the case of a
corporation or LLC, or domiciled, as in the case of a trust of general partnership.
(1g) Organization ID #This is the registration number, if applicable, for the entity. The instructions indicate
that the number should be preceded by the state abbreviation to make the state of registration crystal clear.
37

Recommendations

3 Secured Party NamesThese fields are set up the same way as the debtor name fields to assist in
distinguishing clearly between individuals and organizations.
4 Collateral BoxThe collateral description goes here. Recorders should expect to find collateral that indicates
fixtures, minerals or timber, or an overall statement like All assets.
5 Alternate DesignationNot all transactions covered by the UCC are loans between a secured party and a
debtor. These fields give the filer an opportunity to characterize other relationships to inform later searchers.
6 Record in Real EstateThis box should be checked for all recording office filings.
7 Search RequestThis box is included as a convenience to filers in filing offices that allow a search to reflect
to be ordered after the financing statement is indexed.
8 Optional InformationThis area is set aside for use by the filer. It may contain internal reference number, bar
codes, or anything else useful to the filer.
National UCC Financing Statement Addendum UCC1Ad

The addendum is designed to provide a matching format on which to place information that for some reason does
not fit on the financing statement itself. Items on the addendum include, by number:
9 First DebtorThis is to identify that the addendum is related to the financing statement.
10 MiscellaneousUse includes a place for information necessary in the states of Florida, Alabama, Tennessee
and Maryland regarding taxes on certain types of secured transactions.
11/12 Additional Debtor and Secured Party NamesThe boxes are exactly the same as those on the UCC1.
Use of this form for multiple debtors and secured parties assures the preparer that she has completed all the
necessary information about the entity. For the recorders point of view, use of this forms makes clear what debtors
and secured parties are to be indexed. It is contemplated that multiple addendum forms will be used if there is
more than one extra debtor or secured party.
13/14/15 Realty-Related FilingsHere is where recorders will find the type of filing (13), the property
description (14)which may point to another attachment, of courseand record owner names (15)which must
be indexed along with debtor names as grantors.
16 Collateral DescriptionThis is space if the filer runs out of space on the UCC1.
17 Trust/Estate EntitiesThis series of check boxes is intended to help searchers to determine certain special
entity types.
18 Special Transaction TypesTransmitting utilities, manufactured home transactions and public finance
transactions are accorded special status under Article 9.
National UCC Financing Statement Amendment UCC3

If your are in a state like California where the change form is designated UCC2 and the search form is designated
UCC3 today, note that the new amendment form is designated UCC3. There is no provision in the new Article 9
for acceptance of a standard search request form. Section 9-523 merely specifies that filing offices must make
available search information. It is anticipated that the Secured Transaction Section of the International
Association of Corporate Administrators, which has responsibility for promulgating model central filing office
procedures under new Article 9, will design a national standard search request form for acceptance by all states.
1a Initial Financing Statement File #In those states that have chosen the alternate wording for recording
offices recommended in chapter 7, this field would include not only the file number, but also the original filing
date. The field may also include the name of your recording office.
1b Debtor/Record Owner NamesThe instructions state that debtor and record owner names should be listed
in item 13 of the addendum (see below), depending on the circumstances.
The Note below instruction 1bIt states that filers may indicate other amendments on a continuation
amendment.
Task Force RecommendationThe task force believes it would be appropriate to charge one fee and to index
the filing as a UCC continuation, no matter whether or not other boxes are checked on the amendment.
38

Types of AmendmentsCheck the appropriate box for the type of amendment:
1. TerminationNote that there is no such thing as a full release.
2. Continuation
3. AssignmentAssignor is in item 9 and assignee is item 7a or 7b. Collateral description may also appear in
item 8.
4. Name/address amendmentType of change depends on which combination of boxes is checked
Debtor or secured party, and
Change or delete or add
For change, 6 contains old name and 7 contains new name and/or new address and/or organizational
information; for delete, 6 contains old name and 7 is blank; and for add, 6 is blank and 7 contains new name
and address. If add is a debtor, organizational information in 7(e)-(g) is also required.
8 Collateral AmendmentAdds, deletes and changes to collateral are stated here.
9 Authorizing PartyName of organization or individual authorizing the amendment. Usually this is where you
will pick up the name of the secured party for indexing. Additional secured parties are listed on the addendum in
item 13. However, there are three rare circumstances in which this field does not contain that required
information:
(1) If the amendment adds collateral, the instruction says to enter the debtor name,
(2) if the amendment adds a new debtor, the instruction says to enter the debtor name, and
(3) if a debtor wishes to record a purported termination.
In all these cases, you can recognize this as an exceptional filing because the box is checked. The secured party
name will be found, per the instructions, on the addendum in these cases.
10 Optional InformationThis area is set aside, like item 8 on the financing statement, for use by the filer. It
may contain internal reference number, bar codes, or anything else useful to the filer.
National UCC Financing Statement Amendment Addendum UCC3Ad

The addendum is designed to provide a standard, matching format on which to place information that for some
reason does not fit on the amendment itself.
11/12 ReferencesThese items repeat the filing number, date in states following the chapter 7 recommendations,
and first authorizing party name to relate the addendum to the amendment.
13 Blank SpaceAs noted above, this space may include,
(1) a list of the debtor names repeated from the initial financing statement,
(2) a list of record owner names repeated from the initial financing statement,
(3) a list of additional assignors (item 9),
(4) a list of additional authorizing parties (item 9),
(5) a list of secured parties and other debtors and record owners if the name in item 9 is a debtor.
(6) a list of new debtors (item 7), or
(7) A continuation of the list of collateral to be deleted, added, changed or restated (item 8)
It is hoped that each such list will be clearly identified so that the recording office can properly index the filing.
Correction Statement
In addition to the four types of amendments included on the form discussed above, there is another type of
amendment, the correction statement, allowed under section 9-518, to be filed by any person who wishes to place
on the record a statement regarding a purported inaccuracy in a financing statement or to state that the financing
statement was wrongfully filed in the first place. (As with all UCC filings, it is up to the searcher to determine
whether a filing is legally effective, based on a review of all the facts surrounding the filing, including correction
statements.)
This special amendment might be used, for example, by a government official against whom purportedly
fraudulent UCC financing statements have been filed to indicate that the
39

Recommendations

There is no form promulgated under new Article 9 for a correction statement. The basic requirements for the
statement are that the filing:
(1) identify the filing number (and date if applicable) of the original financing statement,
(2) indicate that it is a correction statement, and
(3) contain a statement regarding the persons belief as to the inaccuracy or wrongful filing of the referenced
financing statement.
A correction statement submitted to a recorder in a state where Alternative B to 9-518 is enacted must also
contain:
(4) a listing of the collateral from the original financing statement,
(5) an indication that the statement is to be filed for record in the real property records, and
(6) a description of the real property involved.
Remember that of these six required elements, only omission of item (1), (2) or (6), or submission of too little
filing fee, allows rejection of the statement.
Task Force Recommendation: It is recommended that fees charged for correction statements be the same as for
other amendments.
Summary of Recording Office Indexing Rules Using New National Forms

Item numbers on forms are indicated.
Form
Original Filing
Initial Financing Statement
Financing Statement Addendum
(or attached list)
Amendment Filings
Termination
Continuation
Debtor Name add
Debtor name delete
Debtor name/address change
Collateral change
Assignment
Item 9 box checked
Grantors
Grantees
First debtor name (1a or 1b)

Second debtor name (2a or 2b
Additional debtor names (11a or
11b)
Record owner names (15)
First secured party name (3a or 3b)
All debtors and record owners (13)

Debtor name (7a or 7b)
Debtor name (6a or 6b)
Old debtor name (6a or 6b) and
New debtor name (7a or 7b)
All debtors and record owners (13),
and assignor secured party (9a or 9b
and 13)
Debtor name (9 and 13) and record
owner names (13)
Secured parties (9a or 9b and 13)

Additional secured party names or

assignors (12a or 12 b)

All assigned-to secured parties (7a
or 7b and 13)
Secured parties listed in 13
The two less than obvious indexing situations, except for the rare item 9 case, involve debtor name changes and
assignments. The reason that debtors and record owners are indexed as grantors is explained in Chapter 6 under
Issue 8. The reason for including both old and new debtor names as grantors when a debtor name changes is so
that a searcher can find the filing under either name. Also, logically and as a matter of practice, the secured party
is always the grantee on a UCC filing.
40

Chapter 9Filing Operations Under Part 9-5
This section will recommend a list of standard operating procedures to be followed by recording offices under
new Article 9-5, including indexing standards, stamping, and rejection procedures, including standard rejection
forms.
Indexing
The following indexing is required for each type of form received:
(1) Initial financing statement
(a)
All debtor names, as given1, as grantor
(b)
All record owner names, as grantor, and
(c)
All secured parties, as grantee
The record owner names and additional debtor names are stated on the national addendum form.
(1) Assignments
(2) Other Amendments
Note 1Debtor names as given means not to guess about the form of a name. For example:
(1)Ernst, Carl R. is entered as given, but if the filer states the name as Carl R. Ernst it is entered in that order,
not reordered, and (2) UCC Guide DBA Ernst Publishing is enter as one entry, not split up as two.
It is the responsibility of the filer to get it right, not a recorder to guess what the filer meant.
For those states where consumer goods and farm related collateral still require filing locally, recording office rules
will be explained.

Recommendations
41
Chapter 9Filing Operations Under Part 9-5

Chapter 10Searching Operations Under Part 9-5
This section will recommend a list of standard procedures for those recording offices that perform UCC searches.
Chapter 10Searching Operations Under Part 9-5
42

Appendix IArticle 9 Part 1Definitions
In order to understand how terms are used in Part 9-5, a recorder needs to know their definitions. Part 9-1 contains
most of these definitions. The most important definitions to Part 9-5 have been highlighted and are quoted in this
chapter. Some definitions which may seem to be obvious are quoted here so that this Guide can be used to train
new recording employees in the administration of UCC filings a recording office receives.
The Part starts with the heading,
SECTION 9-102. DEFINITIONS AND INDEX OF DEFINITIONS.
(a) In this article:
Each definition is numbered in alphabetical order as noted, but we have put them together in a way that is more
useful for discussion of their affect on your operations into the following categories:
1. Elements of Secured TransactionsDefinitions of terms like financing statement that are used to describe
these transactions.
2. Filing Office OperationsDefinitions of terms used to describe filing office operations.
3. Parties to a Secured TransactionDefinitions of terms like debtor that describe those involved in a
transaction.
4. Types of CollateralDefinitions of terms used to describe what collateral means and the categories of
collateral.
5. Collateral Description
1. Elements of a Secured Transaction

(5) "Agricultural lien" means an interest, other than a security interest, in farm products:
(A) which secures payment or performance of an obligation for:
(i) goods or services furnished in connection with a debtor's farming operation; or
(ii) rent on real property leased by a debtor in connection with its farming operation;
(B) which is created by statute in favor of a person that:
(i) in the ordinary course of its business furnished goods or services to a debtor in connection with a debtor's
farming operation; or
(ii) leased real property to a debtor in connection with the debtor's farming operation; and
(C) whose effectiveness does not depend on the person's possession of the personal property.
(7) "Authenticate" means to:
(A) sign; or
(B) execute or adopt a symbol, or encrypt a record in whole or in part, with present intent to:
(i) identify the authenticating party; and
(ii) adopt, accept, or establish the authenticity of a record or term.
CommentArticle 9-5 does not require authentication of any financing statement, which is just a notice. The
underlying security or similar agreement must of course be properly authenticated.
(20) "Consignment" means a transaction, regardless of its form, in which a person delivers goods to a merchant
for the purpose of sale and:
(A) the merchant:
(i) deals in goods of that kind under a name other than the name of the person making delivery;
(ii) is not an auctioneer; and
(iii) is not generally known by its creditors to be substantially engaged in selling the goods of others;
(B) with respect to each delivery, the aggregate value of the goods is $1,000 or more at the time of delivery;
(C) the goods are not consumer goods immediately before delivery; and
(D) the transaction does not create a security interest that secures an obligation.
(24) "Consumer-goods transaction" means a transaction to the extent that:
(A) an individual incurs an obligation primarily for personal, family, or household purposes; and
43

Recommendations

(B) a security interest in consumer goods or in consumer goods and software that is used, licensed, or bought for
use primarily for personal, family, or household purposes secures the obligation.
(26) "Consumer transaction" means a transaction to the extent that (i) an individual incurs an obligation
primarily for personal, family, or household purposes, (ii) a security interest secures the obligation, and (iii) the
collateral is held or acquired primarily for personal, family, or household purposes. The term includes a
consumer-goods transaction.
(27) "Continuation statement" means an amendment of a financing statement which:
(A) identifies, by its file number, the initial financing statement to which it relates; and
(B) indicates that it is a continuation statement for, or that it is filed to continue the effectiveness of, the identified
(30) "Document" means a document of title or a receipt of the type described in Section 7-201(2).
(39) "Financing statement" means a record or records composed of an initial financing statement and any filed
record relating to the initial financing statement.
CommentSee the definition of record, item (69) below.
(40) "Fixture filing" means the filing of a financing statement covering goods that are or are to become fixtures
and satisfying the requirements of Section 9-502(a) and (b). The term includes the filing of a financing statement
covering goods of a transmitting utility which are or are to become fixtures.
(50) "Jurisdiction of organization," with respect to a registered organization, means the jurisdiction under whose
law the organization is organized.
(55) "Mortgage" means a consensual interest in real property, including fixtures, which is created by a mortgage,
trust deed, or similar transaction.
(56) "New debtor" means a person that becomes bound as debtor under Section 9-203(c) 203(d) by a security
agreement previously entered into by another person.
(64) "Proceeds" means the following property:
(A) whatever is acquired upon the sale, lease, license, exchange, or other disposition of collateral;
(B) whatever is collected on, or distributed on account of, collateral;
(C) rights arising out of collateral;
(D) to the extent of the value of collateral, claims arising out of the loss, nonconformity, or interference with the
use of, defects or infringement of rights in, or damage to the collateral; and
(E) to the extent of the value of collateral and to the extent payable to the debtor or the secured party, insurance
payable by reason of the loss or nonconformity of, defects in, or damage to the collateral.
(69) Except as used in "for record," "of record," "record or legal title," and "record owner," "record" means
information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is
retrievable in perceivable form.
(73) "Security agreement" means an agreement that creates or provides for a security interest.
(76) "State" means a State of the United States, the District of Columbia, Puerto Rico, the United States Virgin
Islands, or any territory or insular possession subject to the jurisdiction of the United States.
(79) "Termination statement" means an amendment of a financing statement which:
(A) identifies, by its file number, the initial financing statement to which it relates; and
(B) indicates either that it is a termination statement or that the identified financing statement is no longer
effective.
2. Filing Office Operation

(18) "Communicate" means:
(A) to send a written or other tangible record;
44

(B) to transmit a record by any means agreed upon by the persons sending and receiving the record; or
(C) in the case of transmission of a record to or by a filing office, to transmit a record by any means prescribed
by filing-office rule.
CommentThere is no concept of certification in Article 9.
(36) "File number" means the number assigned to an initial financing statement pursuant to Section 519(a).
(37) "Filing office" means an office designated in Section 9-501 as the place to file a financing statement.
(38) "Filing-office rule" means a rule adopted pursuant to Section 9-526.
(74) "Send," in connection with a record or notification, means to:
(A) deposit in the mail, deliver for transmission, or transmit by any other usual means of communication, with
postage or cost of transmission provided for, addressed to any address reasonable under the circumstances; or
(B) cause the record or notification to be received within the time that it would have been received if properly
sent under subparagraph (A).
3. Parties to a Secured Transaction

(19) "Consignee" means a merchant to which goods are delivered in a consignment.
(21) "Consignor" means a person that delivers goods to a consignee in a consignment.
(22) "Consumer debtor" means a debtor in a consumer transaction.
(25) "Consumer obligor" means an obligor who is an individual and who incurred the obligation as part of a
transaction entered into primarily for personal, family, or household purposes.
(28) "Debtor" means:
(A) a person having a property interest, other than a security interest or other lien, in the collateral, whether or
not the person is an obligor;
(B) a seller of accounts, chattel paper, payment intangibles, or promissory notes; or
(C) a consignee.
(59) "Obligor" means a person that, with respect to an obligation secured by a security interest in or an
agricultural lien on the collateral, (i) owes payment or other performance of the obligation, (ii) has provided
property other than the collateral to secure payment or other performance of the obligation, or (iii) is otherwise
accountable in whole or in part for payment or other performance of the obligation. The term does not include an
issuer or a nominated person under a letter of credit.
(60) "Original debtor" means a person that, as debtor, entered into a security agreement to which a new debtor
has become bound under Section 9-203(c) 203(d).
(70) "Registered organization" means an organization organized solely under the law of one State or the United
States and as to which the State or the United States must maintain a public record showing the organization to
have been organized.
(71) "Secondary obligor" means an obligor to the extent that:
(A) the obligor's obligation is secondary; or
(B) the obligor has a right of recourse with respect to an obligation secured by collateral against the debtor,
another obligor, or property of either.
(72) "Secured party" means:
(A) a person in whose favor a security interest is created or provided for under a security agreement, whether or
not any obligation to be secured is outstanding;
(B) a person that holds an agricultural lien;
(C) a consignor;
(D) a person to which accounts, chattel paper, payment intangibles, or promissory notes have been sold;
45

Recommendations

(E) a trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest
or agricultural lien is created or provided for; or
(F) a person that holds a security interest arising under Section 2-401, 2-505, 2-711(3), 2A-508(5), 4-210, or 5118.
4. Types of Collateral
(6) "As-extracted collateral" means:
(A) oil, gas, or other minerals that are subject to a security interest that:
(i) is created by a debtor having an interest in the minerals before extraction; and
(ii) attaches to the minerals as extracted; or
(B) accounts arising out of the sale at the wellhead or minehead of oil, gas, or other minerals in which the debtor
had an interest before extraction.
(12) "Collateral" means the property subject to a security interest or agricultural lien. The term includes:
(A) proceeds to which a security interest attaches under Section 9-315;
(B) accounts, chattel paper, payment intangibles, and promissory notes that have been sold; and
(C) goods that are the subject of a consignment.
(23) "Consumer goods" means goods that are used or bought for use primarily for personal, family, or household
purposes.
(33) "Equipment" means goods other than inventory, farm products, or consumer goods.
(34) "Farm products" means goods, other than standing timber, with respect to which the debtor is engaged in a
farming operation and which are:
(A) crops grown, growing, or to be grown, including:
(i) crops produced on trees, vines, and bushes; and
(ii) aquatic goods produced in aquacultural operations;
(B) livestock, born or unborn, including aquatic goods produced in aquacultural operations;
(C) supplies used or produced in a farming operation; or
(D) products of crops or livestock in their unmanufactured states.
(35) "Farming operation" means raising, cultivating, propagating, fattening, grazing, or any other farming,
livestock, or aquacultural operation.
(41) "Fixtures" means goods that have become so related to particular real property that an interest in them
arises under real property law.
(44) "Goods" means all things that are movable when a security interest attaches. The term includes (i) fixtures,
(ii) standing timber that is to be cut and removed under a conveyance or contract for sale, (iii) the unborn young
of animals, (iv) crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or bushes,
and (v) manufactured homes. A computer program that is contained in goods other than a computer or computer
peripheral is part of The term also includes a computer program structurally integrated with goods, any
informational content included in the program, and any supporting information provided in connection with a
transaction relating to the program or informational content if (i) the program is associated with the goods in
such a manner that it customarily is considered part of the goods, or (ii) by becoming the owner of the goods, a
person would acquire a right to use the program in connection with the goods. The term does not include a
program integrated with goods that consist solely of the medium with which the program is integrated. The term
also does not include accounts, chattel paper, commercial tort claims, deposit accounts, documents, general
intangibles, instruments, investment property, letter-of-credit rights, letters of credit, money, or oil, gas, or other
minerals before extraction.
(48) "Inventory" means goods, other than farm products, which:
(A) are leased by a person as lessor;
(B) are held by a person for sale or lease or to be furnished under contracts of service;
46

(C) are furnished by a person under a contract of service; or
(D) consist of raw materials, work in process, or materials used or consumed in a business.
(53) "Manufactured home" means a structure, transportable in one or more sections, which in the traveling
mode, is eight body feet or more in width or 40 body feet or more in length, or, when erected on site, is 320 or
more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or
without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, airconditioning, and electrical systems contained therein. The term includes any structure that meets all of the
requirements of this paragraph except the size requirements and with respect to which the manufacturer
voluntarily files a certification required by the United States Secretary of Housing and Urban Development and
complies with the standards established under Title 42 of the United States Code.
CommentManufactured home have special treatment under Article 9.
5. Collateral Description
This section stipulates what is necessary in a collateral description to be sufficient to put a searcher on notice as to
what are the types of collateral covered by a loan.
SECTION 9-108. SUFFICIENCY OF DESCRIPTION.
(a) Except as otherwise provided in subsections (c), (d), and (e), a description of personal or real property is
sufficient, whether or not it is specific, if it reasonably identifies what is described.
(b) Except as otherwise provided in subsection (d), a description of collateral reasonably identifies the collateral
if it identifies the collateral by:
(1) specific listing;
(2) category;
(3) except as otherwise provided in subsection (e), a type of collateral defined in [the Uniform Commercial
Code];
(4) quantity;
(5) computational or allocational formula or procedure; or
(6) except as otherwise provided in subsection (c), any other method, if the identity of the collateral is objectively
determinable.
(c) A description of collateral as all the debtors assets or all the debtors personal property or using words
of similar import does not reasonably identify the collateral.
(d) Except as otherwise provided in subsection (e), a description of a security entitlement, securities account, or
commodity account is sufficient if it describes:
(1) the collateral by those terms or as investment property; or
(2) the underlying financial asset or commodity contract.
(e) A description only by type of collateral defined in the [Uniform Commercial Code] is an insufficient
description of:
(1) a commercial tort claim; or
(2) in a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity
account.

Recommendations
47

Appendix IIArticle 9 Part 3Perfection and Priority
Where to File
Sections 9-301 and 302 indicate where to file when filing is required. The general rule, stated in 9-301(1), is to
file where the debtor is located. See 9-307 below for the definition of the location of debtor. Subsections (2)-(4)
deal with special rules of no interest ot recorders. Subsections (5) and (6) state where to file, which is with the
recorder where the collateral is fixtures (4), timber to be cut (5) or as-extracted collateral (6).
SECTION 9-301. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS. Except
as otherwise provided in Sections 9-303 through 9-306, the following rules determine the law governing
perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral:
(1) Except as otherwise provided in this section, while a debtor is located in a jurisdiction, the local law of that
jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in
collateral.
(2) While collateral is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of
perfection or nonperfection, and the priority of a possessory security interest in that collateral.
(3) Except as otherwise provided in paragraphs (4), (5), and (6), while negotiable documents, goods,
instruments, money, or tangible chattel paper is located in a jurisdiction, the local law of that jurisdiction governs
the effect of perfection or nonperfection and the priority of a nonpossessory security interest.
(4) While goods are located in a jurisdiction, the local law of that jurisdiction governs perfection of a security
interest in the goods by filing a fixture filing.
(5) The local law of the jurisdiction in which timber to be cut is located governs perfection of a security
interest in the timber.
(6) The local law of the jurisdiction in which the wellhead or minehead is located governs perfection, the effect
of perfection or nonperfection, and the priority of a security interest in as-extracted collateral.
Whereas the old Article 9 only deals with security interests, the new Code also bring something called
agricultural liens within the reach of Article 9. See Appendix I for a definition of this term. These liens have
nothing to do with what recorders in some states think of as local crop filings or Food Security Act filings. The
where to file rule stated below is different from the rule for security interests in that the place of filing is the state
where the collateral is located, not where the debtor is located..
SECTION 9-302. LAW GOVERNING PERFECTION AND PRIORITY OF AGRICULTURAL LIENS. While
farm products are located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of
perfection or nonperfection, and the priority of an agricultural lien on the farm products.
Location of Debtor
Under new Article 9, Section 9-301 the general rule of where to file is location of debtor. Section 9-307 defines
the term, location of debtor.
SECTION 9-307. LOCATION OF DEBTOR.
(a) In this section, "place of business" means a place where a debtor conducts its affairs.
(b) Except as otherwise provided in this section, the following rules determine a debtor's location:
(1) An individual debtor is located at the individual's residence.
(2) Any other debtor having only one place of business is located at its place of business.
(3) Any other debtor having more than one place of business is located at its chief executive office.
(c) Subsection (b) applies only if a debtor's residence, place of business, or chief executive office, as applicable, is
located either in (i) a State or in(ii) a jurisdiction, other than a State, whose law requires information concerning
the existence of a nonpossessory security interest to be made generally available in a filing, recording, or
registration system as a condition or result of the security interest's obtaining priority over the rights of a lien
creditor with respect to the collateral. If subsection (b) does not apply, the debtor is located in the District of
Columbia.
48

(d) A person that ceases to exist, have a residence, or have a place of business continues to be located in the
jurisdiction specified by subsections (b) and (c).
(e) A registered organization that is organized under the law of a State is located in that State.
(f) Except as otherwise provided in subsection (i), a registered organization that is organized under the law of the
United States and a branch or agency of a bank that is a registered organization and is not organized under the
law of the United States or a State are located:
(1) in the State that the law of the United States designates, if the law designates a State of location;
(2) in the State that the registered organization designates, if the law of the United States authorizes the
registered organization to designate its State of location; or
(3) in the District of Columbia, if neither paragraph (1) nor paragraph (2) applies.
(g) A registered organization continues to be located in the jurisdiction specified by subsection (e) or (f)
notwithstanding:
(1) the suspension, revocation, forfeiture, or lapse of the registered organization's status as such in its jurisdiction
of organization; or
(2) the dissolution, winding up, or cancellation of the existence of the registered organization.
(h) The United States is located in the District of Columbia.
(i) A branch or agency of a bank that is not organized under the law of the United States or a State is located in
the State in which the branch or agency is licensed, if all branches and agencies of the bank are licensed in only
one State.
(j) A foreign air carrier under the Federal Aviation Act of 1958, as amended, is located at the designated office of
the agent upon which service of process may be made on behalf of the carrier.
(k) This section applies only for purposes of this part.
Priority
Priority of filings is defined as the relative rights of secured parties in a particular property or class of property.
Section 9-322 states the general rule for determining the priority of filings, by different secured parties, which list
the same collateral.
SECTION 9-322. PRIORITIES AMONG CONFLICTING SECURITY INTERESTS AND AGRICULTURAL LIENS
IN SAME COLLATERAL.
(a) Except as otherwise provided in this section, priority among conflicting security interests and agricultural
liens in the same collateral is determined according to the following rules:
(1) Conflicting perfected security interests and agricultural liens rank according to priority in time of filing or
perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security
interest or agricultural lien is first perfected, if there is no period thereafter when there is neither filing nor
perfection.
(2) A perfected security interest or agricultural lien has priority over a conflicting unperfected security interest or
agricultural lien.
(3) The first security interest or agricultural lien to attach or become effective has priority if conflicting security
interests and agricultural liens are unperfected.
(b) For the purposes subsection (a)(1):
(1) the time of filing or perfection as to a security interest in collateral is also the time of filing or perfection as to
a security interest in proceeds; and
(2) the time of filing or perfection as to a security interest in collateral supported by a supporting obligation is
also the time of filing or perfection as to a security interest in the supporting obligation.
(c) Except as otherwise provided in subsection (f), a security interest in collateral which qualifies for priority over
a conflicting security interest under Section 9-327, 9-328, 9-329, 9-330, or 9-331 also has priority over a
conflicting security interest in:
(1) any supporting obligation for the collateral; and
(2) proceeds of the collateral if:
(A) the security interest in proceeds is perfected;
(B) the proceeds are:
49

Recommendations

(i) cash proceeds; or
(ii) of the same type as the collateral; and
(C) in the case of proceeds that are proceeds of proceeds, all intervening proceeds are cash proceeds, proceeds of
the same type as the collateral, or, if the collateral has been or is to be sold or otherwise disposed of, an account
relating to the collateral.
(d) Subject to subsection (e) and except as otherwise provided in subsection (f), if a security interest in chattel
paper, deposit accounts, negotiable documents, instruments, investment property, or letter-of-credit rights is
perfected by a method other than filing, conflicting perfected security interests in proceeds of the collateral rank
according to priority in time of filing.
(e) Subsection (d) applies only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable
documents, instruments, investment property, or letter-of-credit rights.
(f) Subsections (a) through (e) are subject to:
(1) subsection (g) and the other provisions of this part;
(2) Section 4-210 with respect to a security interest of a collecting bank; (3) Section 5-118 with respect to a
security interest of an issuer or nominated person; and
(4) Section 9-110 with respect to a security interest arising under Article 2 or 2A.
(g) If a statute under which an agricultural lien in collateral is created provides that the agricultural lien has
priority over a conflicting security interest or agricultural lien in the same collateral, the statute governs priority
if the agricultural lien is perfected.
PriorityPurchase Money Security Interests

Purchase money security interests arise from lending or leasing on newly acquired equipment or inventory. In the
case of equipment that could also be construed as a fixture, a filing is required within 20 days of delivery of the
collateral to the debtor. This is one reason that a recorder must stamp filings with the date received and not hold
them for later stamping.
SECTION 9-324. PRIORITY OF PURCHASE-MONEY SECURITY INTERESTS.
(a) Subject to subsection (b) and except as otherwise provided in subsection (g), a perfected purchase-money
security interest in inventory has priority over a conflicting security interest in the same inventory, has priority
over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in
proceeds of the chattel paper, if so provided in Section 9-330, and, except as otherwise provided in Section 9-327,
also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are
received on or before the delivery of the inventory to a buyer, if:
(1) the purchase-money security interest is perfected when the debtor receives possession of the inventory;
(2) the purchase-money secured party sends an authenticated notification to the holder of the conflicting security
interest;
(3) the holder of the conflicting security interest receives the notification within five years before the debtor
receives possession of the inventory; and
(4) the notification states that the person sending the notification has or expects to acquire a purchase-money
security interest in inventory of the debtor and describes the inventory.
(b) Subsections (a)(2) through (4) apply only if the holder of the conflicting security interest had filed a financing
statement covering the same types of inventory:
(1) if the purchase-money security interest is perfected by filing, before the date of the filing; or
(2) if the purchase-money security interest is temporarily perfected without filing or possession under Section 9312(f), before the beginning of the 20-day period thereunder.
(c) Subject to subsection (e) and except as otherwise provided in subsection (g), a perfected purchase-money
security interest in livestock that are farm products has priority over a conflicting security interest in the same
livestock, and, except as otherwise provided in Section 9-327, a perfected security interest in their identifiable
proceeds and identifiable products in their unmanufactured states also has priority, if:
(1) the purchase-money security interest is perfected when the debtor receives possession of the livestock;
(2) the purchase-money secured party sends an authenticated notification to the holder of the conflicting security
interest;
50

(3) the holder of the conflicting security interest receives the notification within six months before the debtor
receives possession of the livestock; and
(4) the notification states that the person sending the notification has or expects to acquire a purchase-money
security interest in livestock of the debtor and describes the livestock.
(d) Subsections (c)(2) through (4) apply only if the holder of the conflicting security interest had filed a financing
statement covering the same types of livestock:
(1) if the purchase-money security interest is perfected by filing, before the date of the filing; or
(2) if the purchase-money security interest is temporarily perfected without filing or possession under Section 9312(f), before the beginning of the 20-day period thereunder.
(e) Except as otherwise provided in subsection (g), a perfected purchase-money security interest in goods other
than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as
otherwise provided in Section 9-327, a perfected security interest in its identifiable proceeds also has priority, if
the purchase-money security interest is perfected when the debtor receives possession of the collateral or within
20 days thereafter.
(f) Except as otherwise provided in subsection (g), a perfected purchase-money security interest in software has
priority over a conflicting security interest in the same collateral, and, except as otherwise provided in Section 9327, a perfected security interest in its identifiable proceeds also has priority, to the extent that the purchasemoney security interest in the goods in which the software was acquired for use has priority in the goods and
proceeds of the goods under this section.
(g) If more than one security interest qualifies for priority in the same collateral under subsection (a), (c), (e), or
(f):
(1) a security interest securing an obligation incurred as all or part of the price of the collateral has priority over
a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the
use of collateral; and
in all other cases, Section 9-322(a) applies to the qualifying security interests.
PriorityFinancing Statement With Incorrect Information

SECTION 9-338. PRIORITY OF SECURITY INTEREST OR AGRICULTURAL LIEN PERFECTED BY
FILED FINANCING STATEMENT PROVIDING CERTAIN INCORRECT INFORMATION. If a security
interest or agricultural lien is perfected by a filed financing statement providing information described in Section
9-516(b)(5) which is incorrect at the time the financing statement is filed:
(1) the security interest or agricultural lien is subordinate to a conflicting perfected security interest in
the collateral to the extent that the holder of the conflicting security interest gives value in reasonable reliance
upon the incorrect information; and
(2) a purchaser, other than a secured party, of the collateral takes free of the security interest or
agricultural lien to the extent that, in reasonable reliance upon the incorrect information, the purchaser gives
value and, in the case of chattel paper, documents, goods, instruments, or a security certificate, receives delivery
of the collateral.

Recommendations
51

Appendix IIIArticle 9 Part 5Filing
Following is a full copy of the July 30, 1998 final, approved Part 5 of Article 9. Items of interest to recorders are
either highlighted or commented on.
[SUBPART 1. FILING OFFICE; CONTENTS AND EFFECTIVENESS OF

FINANCING STATEMENT]
SECTION 9-501. FILING OFFICE.
(a) Except as otherwise provided in subsection (b), if the local law of this State governs perfection of a security
interest or agricultural lien, the office in which to file a financing statement to perfect the security interest or
agricultural lien is:
(1) the office designated for the filing or recording of a mortgage on the real property, if:
(A) the collateral is as-extracted collateral or timber to be cut; or
(B) the financing statement is filed as a fixture filing and the collateral is goods that are or are to become
fixtures; or
(2) the office of [ ] [or any office duly authorized by [ ]], in all other cases, including if the collateral is goods
that are or are to become fixtures and the financing statement is not filed as a fixture filing.
(b) The office in which to file a financing statement to perfect a security interest in collateral, including fixtures,
of a transmitting utility is the office of [ ]. The financing statement also constitutes a fixture filing as to the
collateral indicated in the financing statement which is or is to become fixtures.
Legislative Note: The State should designate the filing office where the brackets appear. The filing office may be
that of a governmental official (e.g., the Secretary of State) or a private party that maintains the State's filing
system.
CommentsOnly realty-related filings are submitted to recording offices under 9-501(a)(2). The reference to
private party in the legislative note alludes only to central filing offices. There is no intention on the part of the
drafting committee to suggest privatization of any local government agency.
SECTION 9-502. CONTENTS OF FINANCING STATEMENT; MORTGAGE AS FINANCING
STATEMENT; TIME OF FILING FINANCING STATEMENT.
(a) Subject to subsection (b), a financing statement is sufficient only if it:
(1) provides the name of the debtor;
(2) provides the name of the secured party or a representative of the secured party; and
(3) indicates the collateral covered by the financing statement.
(b) Except as otherwise provided in Section 9-501(b), to be sufficient, a financing statement that covers asextracted collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are or are to
become fixtures, must comply with the requirements of subsection (a) and also:
(1) indicate that it covers this type of collateral;
(2) indicate that it is to be filed [for record] in the real property records;
(3) provide a description of the real property to which the collateral is related [sufficient to give constructive
notice of the mortgage under the law of this State if the description were contained in a mortgage of the real
property]; and
(4) if the debtor does not have an interest of record in the real property, provide the name of a record owner.
(c) A real property mortgage is effective from the date of recording as a financing statement filed as a fixture
filing or as a financing statement covering as-extracted collateral or timber to be cut only if:
(1) the mortgage indicates the goods or accounts that it covers;
(2) the goods are or are to become fixtures related to the real property described in the mortgage or the
collateral is related to the real property described in the mortgage and is as-extracted collateral or timber to be
cut;
(3) the mortgage complies with the requirements for a financing statement in this section other than an
indication that it is to be filed in the real property records; and
52

(4) the mortgage is [duly] recorded.
(d) A financing statement may be filed before a security agreement is made or a security interest otherwise
attaches.
Legislative Note: Language in brackets is optional. Where the State has any special recording system for real
property other than the usual grantor-grantee index (as, for instance, a tract system or a title registration or
Torrens system) local adaptations of subsection (b) and Section 9-519(d) and (e) may be necessary. See, e.g.,
Mass. Gen. Laws Chapter 106, Section 9-410.
CommentThis section lists the items that are required to be included a UCC form so that the filing perfects the
interest of the secured party, which remain the same as under prior law.
SECTION 9-503. NAME OF DEBTOR AND SECURED PARTY.
(a) A financing statement sufficiently provides the name of the debtor:
(1) if the debtor is a registered organization, only if the financing statement provides the name of the debtor
indicated on the public record of the debtor's jurisdiction of organization which shows the debtor to have been
organized;
(2) if the debtor is a decedent's estate, only if the financing statement provides the name of the decedent and
indicates that the debtor is an estate;
(3) if the debtor is a trust or a trustee acting with respect to property held in trust, only if the financing statement:
(A) provides the name, if any, specified for the trust in its organic documents or, if no name is specified, provides
the name of the settlor and additional information sufficient to distinguish the debtor from other trusts having one
or more of the same settlors; and
(B) indicates, in the debtor's name or otherwise, that the debtor is a trust or is a trustee acting with respect to
property held in trust; and
(4) in other cases:
(A) if the debtor has a name, only if it provides the individual or organizational name of the debtor; and
(B) if the debtor does not have a name, only if it provides the names of the partners, members, associates, or other
persons comprising the debtor.
(b) A financing statement that provides the name of the debtor in accordance with subsection (a) is not rendered
ineffective by the absence of:
(1) a trade name or other name of the debtor; or
(2) unless required under subsection (a)(4)(B), names of partners, members, associates, or other persons
comprising the debtor.
(c) A financing statement that provides only the debtor's trade name does not sufficiently provide the name of the
debtor.
(d) Failure to indicate the representative capacity of a secured party or representative of a secured party does not
affect the sufficiency of a financing statement.
(e) A financing statement may provide the name of more than one debtor and the name of more than one secured
party.
SECTION 9-504. INDICATION OF COLLATERAL.
A financing statement sufficiently indicates the collateral that it covers if the financing statement provides:
(1) a description of the collateral pursuant to Section 9-108; or
(2) an indication that the financing statement covers all assets or all personal property.
SECTION 9-505. FILING AND COMPLIANCE WITH OTHER STATUTES AND TREATIES FOR
CONSIGNMENTS, LEASES, BAILMENTS, AND OTHER TRANSACTIONS.
(a) A consignor, lessor, or bailor of goods or a buyer of a payment intangible or promissory note may file a
financing statement, or may comply with a statute or treaty described in Section 9-311(a), using the terms
"consignor," "consignee," "lessor," "lessee," "bailor," "bailee," "owner," "registered owner", "buyer," "seller," or
words of similar import, instead of the terms "secured party" and "debtor."
(b) This part applies to the filing of a financing statement under subsection (a) and, as appropriate, to compliance
that is equivalent to filing a financing statement under Section 9-311(c), but the filing or compliance is not of
53

Recommendations

itself a factor in determining whether the collateral secures an obligation. If it is determined for another reason
that the collateral secures an obligation, a security interest held by the consignor, lessor, bailor, owner, or buyer
which attaches to the collateral is perfected by the filing or compliance.
SECTION 9-506. EFFECT OF ERRORS OR OMISSIONS.
(a) A financing statement substantially complying with the requirements of this part is effective, even if it includes
minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.
(b) Except as otherwise provided in subsection (c), a financing statement that fails sufficiently to provide the
name of the debtor in accordance with Section 9-503(a) is seriously misleading.
(c) If a search of the records of the filing office under the debtor's correct name, using the filing office's standard
search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor
in accordance with Section 9-503(a), the name provided does not make the financing statement seriously
misleading.
(d) For purposes of Section 9-508(b), the "debtor's correct name" in subsection (c) means the correct name of the
new debtor.
CommentThe addition of subsections (b) and (c) represent new protections to secured parties.
SECTION 9-507. EFFECT OF CERTAIN EVENTS ON EFFECTIVENESS OF FINANCING
STATEMENT.
(a) A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased,
licensed, or otherwise disposed of and in which a security interest or agricultural lien continues, even if the
secured party knows of or consents to the disposition.
(b) Except as otherwise provided in subsection (c) and Section 9-508, a financing statement is not rendered
ineffective if, after the financing statement is filed, the information provided in the financing statement becomes
seriously misleading under the standard set forth in Section 9-506.
(c) If a debtor so changes its name that a filed financing statement becomes seriously misleading under the
standard set forth in Section 9-506:
(1) the financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or
within four months after, the change; and
(2) the financing statement is not effective to perfect a security interest in collateral acquired by the debtor more
than four months after the change, unless an amendment to the financing statement which renders the financing
statement not seriously misleading is filed within four months after the change.
SECTION 9-508. EFFECTIVENESS OF FINANCING STATEMENT IF NEW DEBTOR BECOMES
BOUND BY SECURITY AGREEMENT.
(a) Except as otherwise provided in this section, a filed financing statement naming an original debtor is effective
to perfect a security interest in collateral in which a new debtor has or acquires rights to the extent that the
financing statement would have been effective had the original debtor acquired rights in the collateral.
(b) If the difference between the name of the original debtor and that of the new debtor causes a filed financing
statement that is effective under subsection (a) to be seriously misleading under the standard set forth in Section
9-506:
(1) the financing statement is effective to perfect a security interest in collateral acquired by the new debtor
before, and within four months after, the new debtor becomes bound under Section 9-203(c); and
(2) the financing statement is not effective to perfect a security interest in collateral acquired by the new debtor
more than four months after the new debtor becomes bound under Section 9-203(c) unless an initial financing
statement providing the name of the new debtor is filed before the expiration of that time.
(c) This section does not apply to collateral as to which a filed financing statement remains effective against the
new debtor under Section 9-507(a).
SECTION 9-509. PERSONS ENTITLED TO FILE A RECORD.
(a) A person may file an initial financing statement, amendment that adds collateral covered by a financing
statement, or amendment that adds a debtor to a financing statement only if:
54

(1) the debtor authorizes the filing in an authenticated record; or
(2) the person holds an agricultural lien that has become effective at the time of filing and the financing statement
covers only collateral in which the person holds an agricultural lien.
(b) By authenticating a security agreement, a debtor authorizes the filing of an initial financing statement, and an
amendment, covering:
(1) the collateral described in the security agreement; and
(2) property that becomes collateral under Section 9-315(a)(2), whether or not the security agreement expressly
covers proceeds.
(c) A person may file an amendment other than an amendment that adds collateral covered by a financing
statement or an amendment that adds a debtor to a financing statement only if:
(1) the secured party of record authorizes the filing; or
(2) the amendment is a termination statement for a financing statement as to which the secured party of record
has failed to file or send a termination statement as required by Section 9-513(a) or (c).
(d) If there is more than one secured party of record for a financing statement, each secured party of record may
authorize the filing of an amendment under subsection (c).
CommentThis section deals with the new concepts of authentication and authorization which replace signature
requirements.
SECTION 9-510. EFFECTIVENESS OF FILED RECORD.
(a) Subject to subsection (c), a filed record is effective only to the extent that it was filed by a person that may
file it under Section 9-509.
(b) A record authorized by one secured party of record does not affect the financing statement with respect to
another secured party of record.
(c) If a person may file a termination statement only under Section 9-509(c)(2), the filed termination statement is
effective only if the debtor authorizes the filing and the termination statement indicates that the debtor authorized
it to be filed.
(d) A continuation statement that is not filed within the six-month period prescribed by Section 9-515(d) is
ineffective.
SECTION 9-511. SECURED PARTY OF RECORD.
(a) A secured party of record with respect to a financing statement is a person whose name is provided as the
name of the secured party or a representative of the secured party in an initial financing statement that has been
filed. If an initial financing statement is filed under Section 9-514(a), the assignee named in the initial financing
statement is the secured party of record with respect to the financing statement.
(b) If an amendment of a financing statement which provides the name of a person as a secured party or a
representative of a secured party is filed, the person named in the amendment is a secured party of record. If an
amendment is filed under Section 9-514(b), the assignee named in the amendment is a secured party of record.
(c) A person remains a secured party of record until the filing of an amendment of the financing statement which
deletes the person.
SECTION 9-512. AMENDMENT OF FINANCING STATEMENT.
Subsection (a) - Alternative A
(a) Subject to Section 9-509, a person may add or delete collateral covered by, continue or terminate the
effectiveness of, or, subject to subsection (e), otherwise amend the information provided in, a financing statement
by filing an amendment that:
(1) identifies, by its file number, the initial financing statement to which the amendment relates; and
(2) if the amendment relates to an initial financing statement filed [or recorded] in a filing office described in
Section 9-501(a)(2), provides the information specified in Section 9-502(b).
Subsection (a) - Alternative B
(a) Subject to Section 9-509, a person may add or delete collateral covered by, continue or terminate the
effectiveness of, or, subject to subsection (e), otherwise amend the information provided in, a financing
statement by filing an amendment that:
55

Recommendations

(1) identifies, by its file number, the initial financing statement to which the amendment relates; and
(2) if the amendment relates to an initial financing statement filed [or recorded] in a filing office described in
Section 9-501(a)(2), provides the date [and time] that the initial financing statement was filed [or recorded]
and the information specified in Section 9-502(b).
[End of Alternatives]
(b) Except as otherwise provided in Section 9-515, the filing of an amendment does not extend the period of
effectiveness of the financing statement.
(c) A financing statement that is amended by an amendment that adds collateral is effective as to the added
collateral only from the date of the filing of the amendment.
(d) A financing statement that is amended by an amendment that adds a debtor is effective as to the added debtor
only from the date of the filing of the amendment.
(e) An amendment is ineffective to the extent it:
(1) purports to delete all debtors and fails to provide the name of a debtor to be covered by the financing
statement; or
(2) purports to delete all secured parties of record and fails to provide the name of a new secured party of record.
Legislative Note: States whose real-estate filing offices require additional information in amendments and
cannot search their records by both the name of the debtor and the file number should enact Alternative B to
Sections 9-512(a), 9-518(b), 9-519(f) and 9-522(a).
CommentAlternative B should apply to recording offices in most states.
SECTION 9-513. TERMINATION STATEMENT.
(a) A secured party shall cause the secured party of record for a financing statement to file a termination
statement for the financing statement if the financing statement covers consumer goods and:
(1) there is no obligation secured by the collateral covered by the financing statement and no commitment to
make an advance, incur an obligation, or otherwise give value; or
(2) the debtor did not authorize the filing of the initial financing statement.
(b) To comply with subsection (a), a secured party shall cause the secured party of record to file the termination
statement:
(1) within one month after there is no obligation secured by the collateral covered by the financing statement and
no commitment to make an advance, incur an obligation, or otherwise give value; or
(2) if earlier, within 20 days after the secured party receives an authenticated demand from a debtor.
(c) In cases not governed by subsection (a), within 20 days after a secured party receives an authenticated
demand from a debtor, the secured party shall cause the secured party of record for a financing statement to send
to the debtor a termination statement for the financing statement or file the termination statement in the filing
office if:
(1) except in the case of a financing statement covering accounts or chattel paper that has been sold or goods that
are the subject of a consignment, there is no obligation secured by the collateral covered by the financing
statement and no commitment to make an advance, incur an obligation, or otherwise give value;
(2) the financing statement covers accounts or chattel paper that has been sold but as to which the account debtor
or other person obligated has discharged its obligation;
(3) the financing statement covers goods that were the subject of a consignment to the debtor but are not in the
debtor's possession; or
(4) the debtor did not authorize the filing of the initial financing statement.
(d) Except as otherwise provided in Section 9-510, upon the filing of a termination statement with the filing office,
the financing statement to which the termination statement relates ceases to be effective.
SECTION 9-514. ASSIGNMENT OF POWERS OF SECURED PARTY OF RECORD.
(a) Except as otherwise provided in subsection (c), an initial financing statement may reflect an assignment of all
of the secured party's power to authorize an amendment to the financing statement by providing the name and
mailing address of the assignee as the name and address of the secured party.
56

(b) Except as otherwise provided in subsection (c), a secured party of record may assign of record all or part of
its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the
financing statement which:
(1) identifies, by its file number, the initial financing statement to which it relates;
(2) provides the name of the assignor; and
(3) provides the name and mailing address of the assignee.
(c) An assignment of record of a security interest in a fixture covered by a real property mortgage that is effective
as a fixture filing under Section 9-502(d) may be made only by an assignment of record of the mortgage in the
manner provided by law of this State other than the [Uniform Commercial Code].
SECTION 9-515. DURATION AND EFFECTIVENESS OF FINANCING STATEMENT; EFFECT OF
LAPSED FINANCING STATEMENT.
(a) Except as otherwise provided in subsections (b), (e), (f), and (g), a filed financing statement is effective for a
period of five years after the date of filing.
(b) Except as otherwise provided in subsections (e), (f), and (g), an initial financing statement filed in connection
with a public-finance transaction or manufactured-home transaction is effective for a period of 30 years after the
date of filing if it indicates that it is filed in connection with a public-finance transaction or manufactured-home
transaction.
(c) The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless
before the lapse a continuation statement is filed pursuant to subsection (d). Upon lapse, a financing statement
ceases to be effective and any security interest or agricultural lien that was perfected by the financing statement
becomes unperfected, unless the security interest is perfected without filing. If the security interest or agricultural
lien becomes unperfected upon lapse, it is deemed never to have been perfected as against a purchaser of the
collateral for value.
(d) A continuation statement may be filed only within six months before the expiration of the five-year period
specified in subsection (a) or the thirty-year period specified in subsection (b), whichever is applicable.
(e) Except as otherwise provided in Section 9-510, upon timely filing of a continuation statement, the effectiveness
of the initial financing statement continues for a period of five years commencing on the day on which the
financing statement would have become ineffective in the absence of the filing. Upon the expiration of the fiveyear period, the financing statement lapses in the same manner as provided in subsection (c), unless, before the
lapse, another continuation statement is filed pursuant to subsection (d). Succeeding continuation statements may
be filed in the same manner to continue the effectiveness of the initial financing statement.
(f) If a debtor is a transmitting utility and a filed financing statement so indicates, the financing statement is
effective until a termination statement is filed.
(g) A real property mortgage that is effective as a fixture filing under Section 9-502(d) remains effective as a
fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the
real property.
[Errors pointed out by Bob Henderson]
SECTION 9-516. WHAT CONSTITUTES FILING; EFFECTIVENESS OF FILING.
(a) Except as otherwise provided in subsection (b), communication of a record to a filing office and tender of the
filing fee or acceptance of the record by the filing office constitutes filing.
(b) Filing does not occur with respect to a record that a filing office refuses to accept because:
(1) the record is not communicated by a method or medium of communication authorized by the filing office;
(2) an amount equal to or greater than the applicable filing fee is not tendered;
(3) the filing office is unable to index the record because:
(A) in the case of an initial financing statement, the record does not provide a name for the debtor;
(B) in the case of an amendment or correction statement, the record:
(i) does not identify the initial financing statement as required by Section 9-512 or 9-518, as applicable; or
(ii) identifies an initial financing statement whose effectiveness has lapsed under Section 9-515;
57

Recommendations

(C) in the case of an initial financing statement that provides the name of a debtor identified as an individual or
an amendment that provides a name of a debtor identified as an individual which was not previously provided in
the financing statement to which the record relates, the record does not identify the debtor's last name; or
(D) in the case of a record filed [or recorded] in the filing office described in Section 9-501(a)(2), the record
does not provide a sufficient description of the real property to which it relates;
(4) in the case of an initial financing statement or an amendment that adds a secured party of record, the record
does not provide a name and mailing address for the secured party of record;
(5) in the case of an initial financing statement or an amendment that provides a name of a debtor which was not
previously provided in the financing statement to which the amendment relates, the record does not:
(A) provide a mailing address for the debtor;
(B) indicate whether the debtor is an individual or an organization; or
(C) if the financing statement indicates that the debtor is an organization, provide:
(i) a type of organization for the debtor;
(ii) a jurisdiction of organization for the debtor; or
(iii) an organizational identification number for the debtor or indicate that the debtor has none;
(6) in the case of an assignment reflected in an initial financing statement under Section 9-514(a) or an
amendment filed under Section 9-514(b), the record does not provide a name and mailing address for the
assignee; or
(7) in the case of a continuation statement, the record is not filed within the six-month period prescribed by
Section 9-515(d).
(c) For purposes of subsection (b):
(1) a record does not provide information if the filing office is unable to read or decipher the information; and
(2) a record that does not indicate that it is an amendment or identify an initial financing statement to which it
relates, as required by Section 9-512, 9-514, or 9-518, is an initial financing statement.
(d) A record that is communicated to the filing office with tender of the filing fee, but which the filing office
refuses to accept for a reason other than one set forth in subsection (b), is effective as a filed record except as
against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record
from the files.
CommentThis section, taken together with section 9-520, specifies what kinds of filings a recorder is allowed to
reject. There are no other acceptable reasons to reject a UCC filing than those enumerated here.
SECTION 9-517. EFFECT OF INDEXING ERRORS.
The failure of the filing office to index a record correctly does not affect the effectiveness of the filed record.
SECTION 9-518. CLAIM CONCERNING INACCURATE OR WRONGFULLY FILED RECORD.
(a) A person may file in the filing office a correction statement with respect to a record indexed there under the
person's name if the person believes that the record is inaccurate or was wrongfully filed.
Subsection (b) - Alternative A
(b) A correction statement must:
(1) identify the record to which it relates by the file number assigned to the initial financing statement to which
the record relates;
(2) indicate that it is a correction statement; and
(3) provide the basis for the person's belief that the record is inaccurate and indicate the manner in which the
person believes the record should be amended to cure any inaccuracy or provide the basis for the person's belief
that the record was wrongfully filed.
Subsection (b) - Alternative B
(b) A correction statement must:
(1) identify the record to which it relates by:
(A) the file number assigned to the initial financing statement to which the record relates; and
58

(B) if the correction statement relates to a record filed [or recorded] in a filing office described in Section 9501(a)(2), the date [and time] that the initial financing statement was filed [or recorded] and the information
specified in Section 9-502(b);
(2) indicate that it is a correction statement; and
(3) provide the basis for the person's belief that the record is inaccurate and indicate the manner in which the
person believes the record should be amended to cure any inaccuracy or provide the basis for the person's
belief that the record was wrongfully filed.
(c) The filing of a correction statement does not affect the effectiveness of an initial financing statement or other
filed record.
Legislative Note: States whose real-estate filing offices require additional information in amendments and
cannot search their records by both the name of the debtor and the file number should enact Alternative B to
Sections 9-512(a), 9-518(b), 9-519(f) and 9-522(a).
CommentMost states should choose alternative A for their recording offices.
[SUBPART 2. DUTIES AND OPERATION OF FILING OFFICE]

SECTION 9-519. NUMBERING, MAINTAINING, AND INDEXING RECORDS; COMMUNICATING
INFORMATION PROVIDED IN RECORDS.
(a) For each record filed in a filing office, the filing office shall:
(1) assign a unique number to the filed record;
(2) create a record that bears the number assigned to the filed record and the date and time of filing;
(3) maintain the filed record for public inspection; and
(4) index the filed record in accordance with subsections (c), (d), and (e).
(b) A file number [assigned after January 1, 2002,] must include a digit that:
(1) is mathematically derived from or related to the other digits of the file number; and
(2) enables the filing office to detect whether a number communicated as the file number includes a single-digit or
transpositional error.
(c) Except as otherwise provided in subsections (d) and (e), the filing office shall:
(1) index an initial financing statement according to the name of the debtor and shall index all filed records
relating to the initial financing statement in a manner that associates with one another an initial financing
statement and all filed records relating to the initial financing statement; and
(2) index a record that provides a name of a debtor which was not previously provided in the financing statement
to which the record relates also according to the name that was not previously provided.
(d) If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, [it must
be filed for record and] the filing office shall index it:
(1) under the names of the debtor and of each owner of record shown on the financing statement as if they were
the mortgagors under a mortgage of the real property described; and
(2) to the extent that the law of this State provides for indexing of mortgages under the name of the mortgagee,
under the name of the secured party as if the secured party were the mortgagee thereunder, or, if indexing is by
description, as if the financing statement were a mortgage of the real property described.
(e) If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, the
filing office shall index an assignment filed under Section 9-514(a) or an amendment filed under Section 9514(b):
(1) under the name of the assignor as grantor; and
(2) to the extent that the law of this State provides for indexing the assignment of a real property mortgage under
the name of the assignee, under the name of the assignee.
Subsection (f) - Alternative A
59

Recommendations

(f) The filing office shall maintain a capability that:
(1) retrieves a record by the name of the debtor and by the file number assigned to the initial financing statement
to which the record relates; and
(2) associates and retrieves with one another an initial financing statement and each filed record relating to the
initial financing statement.
Subsection (f) - Alternative B
(f) The filing office shall maintain a capability that:
(1) retrieves a record by the name of the debtor and:
(A) if the filing office is described in Section 9-501(a)(1), by the file number assigned to the initial financing
statement to which the record relates; or
(B) if the filing office is described in Section 9-501(a)(2), by the file number assigned to the initial financing
statement to which the record relates and the date [and time] that the record was filed [or recorded]; and
(2) associates and retrieves with one another an initial financing statement and each filed record relating to the
initial financing statement.
(g) The filing office may not remove a debtor's name from the index until one year after the effectiveness of a
financing statement naming the debtor lapses under Section 9-515 with respect to all secured parties of record.
(h) The filing office shall perform the acts required by subsections (a) through (e) at the time and in the manner
prescribed by filing-office rule, but not later than two business days after the filing office receives the record in
question.
[(i) [Subsection] [Subsections] [(b)] [and] [(h)] [does] [do] not apply to a filing office described in Section 9501(a)(2).
Legislative Notes:
1. States whose filing offices currently assign file numbers that include a verification number, commonly known
as a "check digit," or can implement this requirement before the effective date of this Article should omit the
bracketed language in subsection (b).
2. In States in which writings will not appear in the real property records and indices unless actually recorded
the bracketed language in subsection (d) should be used.
3. States whose real-estate filing offices require additional information in amendments and cannot search their
records by both the name of the debtor and the file number should enact Alternative B to Sections 9-512(a), 9518(b), 9-519(f) and 9-522(a).
4. A State that elects not to require real-estate filing offices to comply with either or both of subsections (b) and
(h) may adopt an applicable variation of subsection (i) and add "Except as otherwise provided in subsection
(i)," to the appropriate subsection or subsections.
CommentAlternative B and subsection (i) should be enacted for recording offices in most states.
SECTION 9-520. ACCEPTANCE AND REFUSAL TO ACCEPT RECORD.
(a) A filing office shall refuse to accept a record for filing for a reason set forth in Section 9-516(b) and may
refuse to accept a record for filing only for a reason set forth in Section 9-516(b).
(b) If a filing office refuses to accept a record for filing, it shall communicate to the person that presented the
record the fact of and reason for the refusal and the date and time the record would have been filed had the
filing office accepted it. The communication must be made at the time and in the manner prescribed by filingoffice rule but in no event more than two business days after the filing office receives the record.
(c) A filed financing statement complying with Section 9-502(a) and (b) is effective, even if the filing office is
required to refuse to accept it for filing under subsection (a). However, Section 9-338 applies to a filed financing
statement providing information described in Section 9-516(b)(5) which is incorrect at the time the financing
statement is filed.
(d) If a record communicated to a filing office provides information that relates to more than one debtor, this part
applies as to each debtor separately.
60

CommentNote the distinction in subsection (a) between shall and may.
SECTION 9-521. UNIFORM FORM OF WRITTEN FINANCING STATEMENT AND AMENDMENT.
(a) A filing office that accepts written records may not refuse to accept a written initial financing statement in the
following form except for a reason set forth in Section 9-516(b):
[INSERT FINANCING STATEMENT FORM]
[INSERT ADDENDUM FORM]

(b) A filing office that accepts written records may not refuse to accept a written record in the following form
except for a reason set forth in Section 9-516(b):
[INSERT AMENDMENT FORM]
[INSERT AMENDMENT ADDENDUM]

SECTION 9-522. MAINTENANCE AND DESTRUCTION OF RECORDS.
Subsection (a) - Alternative A
(a) Until at least one year after the effectiveness of a filed financing statement lapses under Section 9-515 with
respect to all secured parties of record, the filing office shall maintain a record of the information provided in the
financing statement. The record must be retrievable by using the name of the debtor and by using the file number
assigned to the initial financing statement to which the record relates.
Subsection (a) - Alternative B
(a) Until at least one year after the effectiveness of a filed financing statement lapses under Section 9-515 with
respect to all secured parties of record, the filing office shall maintain a record of the information provided in
the financing statement. The record must be retrievable by using the name of the debtor and:
(1) if the record was filed in the filing office described in Section 9-501(a)(1), by using the file number
assigned to the initial financing statement to which the record relates; or
(2) if the record was filed [or recorded] in the filing office described in Section 9-501(a)(2), by using the file
number assigned to the initial financing statement to which the record relates and the date [and time] that the
record was filed [or recorded].
(b) Except to the extent that a statute governing disposition of public records provides otherwise, the filing office
immediately may destroy any written record evidencing a financing statement. However, if the filing office
destroys a written record, it shall maintain another record of the financing statement which complies with
subsection (a).
Note: States whose real-estate filing offices require additional information in amendments and cannot search
their records by both the name of the debtor and the file number should enact Alternative B to Sections 9512(a), 9-518(b), 9-519(f) and 9-522(a).
SECTION 9-523. INFORMATION FROM FILING OFFICE; SALE OR LICENSE OF RECORDS.
(a) If a person that files a written record requests an acknowledgment of the filing, the filing office shall send to
the person an image of the record showing the number assigned to the record pursuant to Section 9-519(a)(1) and
the date and time of the filing of the record. However, if the person furnishes a copy of the record to the filing
office, the filing office may instead:
(1) note upon the copy the number assigned to the record pursuant to Section 9-519(a)(1) and the date and time
of the filing of the record; and
61

Recommendations

(2) send the copy to the person.
(b) If a person files a record other than a written record, the filing office shall communicate to the person an
acknowledgment that provides:
(1) the information in the record;
(2) the number assigned to the record pursuant to Section 9-519(a)(1); and
(3) the date and time of the filing of the record.
(c) The filing office shall communicate or otherwise make available in a record the following information to any
person that requests it:
(1) whether there is on file on a date and time specified by the filing office, but not a date earlier than three
business days before the filing office receives the request, any financing statement that:
(A) designates a particular debtor [or, if the request so states, designates a particular debtor at the address
specified in the request];
(B) has not lapsed under Section 9-515 with respect to all secured parties of record; and
(C) if the request so states, has lapsed under Section 9-515 and a record of which is maintained by the filing
office under Section 9-522(a);
(2) the date and time of filing of each financing statement; and
(3) the information provided in each financing statement.
(d) In complying with its duty under subsection (c), the filing office may communicate information in any medium.
However, if requested, the filing office shall communicate information by issuing [its written certificate] [a record
that can be admitted into evidence in the courts of this State without extrinsic evidence of its authenticity].
(e) The filing office shall perform the acts required by subsections (a) through (d) at the time and in the manner
prescribed by filing-office rule, but not later than two business days after the filing office receives the request.
(f) At least weekly, the [insert appropriate official or governmental agency] [filing office] shall offer to sell or
license to the public on a nonexclusive basis, in bulk, copies of all records filed in it under this part, in every
medium from time to time available to the filing office.
Legislative Notes:
1. States whose filing office does not offer the additional service of responding to search requests limited to a
particular address should omit the bracketed language in subsection (c)(1)(A).
2. A State that elects not to require real-estate filing offices to comply with subsection either or both of
subsections (e) and (f) should specify in that subsection the appropriate subsection(s) only the filing office
described in Section 9-501(a)(1).
SECTION 9-524. DELAY BY FILING OFFICE.
Delay by the filing office beyond a time limit prescribed in this part is excused if:
(1) the delay is caused by interruption of communication or computer facilities, war, emergency conditions,
failure of equipment, or other circumstances beyond control of the filing office; and
(2) the filing office exercises reasonable diligence under the circumstances.
SECTION 9-525. FEES.
(a) Except as otherwise provided in subsection (e), the fee for filing and indexing a record under this part, other
than an initial financing statement of the kind described in Section 9-502(c), is [the amount specified in
subsection (c), if applicable, plus]:
(1) $ __[X]______ if the record is communicated in writing and consists of one or two pages;
(2) $ __[2X]______ if the record is communicated in writing and consists of more than two pages; and
(3) $ __[1/2X]___ if the record is communicated by another medium authorized by filing-office rule.
(b) Except as otherwise provided in subsection (e), the fee for filing and indexing an initial financing statement of
the kind described in Section 9-502(c) is [the amount specified in subsection (c), if applicable, plus]:
(1) $ _____ if the financing statement indicates that it is filed in connection with a public-finance transaction;
(2) $ _____ if the financing statement indicates that it is filed in connection with a manufactured-home
transaction.
Subsection (c)--Alternative A
(c) The number of names required to be indexed does not affect the amount of the fee in subsections (a) and (b).
62

Subsection (c)--Alternative B
(c) Except as otherwise provided in subsection (e), if a record is communicated in writing, the fee for each name
more than two required to be indexed is $ _______.
(d) The fee for responding to a request for information from the filing office, including for [issuing a certificate
showing] [communicating] whether there is on file any financing statement naming a particular debtor, is:
(1) $ ____ if the request is communicated in writing; and
(2) $ ____ if the request is communicated by another medium authorized by filing-office rule.
(e) This section does not require a fee with respect to a mortgage that is effective as a financing statement filed as
a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut under Section 9502(c). However, the recording and satisfaction fees that otherwise would be applicable to the mortgage apply.
Legislative Notes:
1. To preserve uniformity, a State that places the provisions of this section together with statutes setting fees for
other services should do so without modification.
2. A State should enact subsection (c), Alternative A, and omit the bracketed language in subsections (a) and (b)
unless its indexing system entails a substantial additional cost when indexing additional names.
SECTION 9-526. FILING-OFFICE RULES.
(a) The [insert appropriate governmental official or agency] shall adopt and publish rules to carry out the
provisions of this article. The filing-office rules must be[:
(1)] consistent with this article[; and
(2) adopted and published in accordance with the [insert any applicable state administrative procedure act]].
(b) To keep the filing-office rules and practices of the filing office in harmony with the rules and practices of filing
offices in other jurisdictions that enact substantially this part, and to keep the technology used by the filing office
compatible with the technology used by filing offices in other jurisdictions that enact substantially this part, the
[insert appropriate governmental official or agency], so far as is consistent with the purposes, policies, and
provisions of this article, in adopting, amending, and repealing filing-office rules shall:
(1) consult with filing offices in other jurisdictions that enact substantially this part; and
(2) consult the most recent version of the Model Rules promulgated by the International Association of Corporate
Administrators or any successor organization; and
(3) take into consideration the rules and practices of, and the technology used by, filing offices in other
jurisdictions that enact substantially this part.
CommentThis section and others that deal with filing office operations need to be amended with the optional
wording provided in the model act and in the chapter on optional Wording to apply to recording offices.
SECTION 9-527. DUTY TO REPORT.
The [insert appropriate governmental official or agency] shall report [annually on or before ________ ] to the
[Governor and Legislature] on the operation of the filing office. The report must contain a statement of the extent
to which:
(1) the filing office has complied with the time limits prescribed in this part and the reasons for any
noncompliance;
(2) the filing-office rules are not in harmony with the rules of filing offices in other jurisdictions that enact
substantially this part and the reasons for these variations; and
(3)(2) the filing-office rules are not in harmony with the most recent version of the Model Rules promulgated by
the International Association of Corporate Administrators, or any successor organization, and the reasons for
these variations.

Recommendations
63

Appendix IVArticle 9 Part 7Transition
The title of this section is as follows:
SECTION 9-701. EFFECTIVE DATE.
(a) This [Act] takes effect on [January July 1, 2001].
CommentIt is planned for the new Article 9 to become effective nationwide as of July 1, 2001.
SECTION 9-702. SAVINGS CLAUSE.
(a) Except as otherwise provided in this part, this [Act] applies to a transaction or lien within its scope, even if
the transaction or lien was entered into or created before this [Act] takes effect.
(b) Transactions Except as otherwise provided in subsection (c) and Sections 9-703 through 9-708:
(1) transactions and liens that were not governed by [former Article 9], were validly entered into or created
before this [Act] takes effect, and would be subject to this [Act] if they had been entered into or created after this
[Act] takes effect, and the rights, duties, and interests flowing from those transactions and liens remain valid after
this [Act] takes effect. They; and
(2) the transactions and liens may be terminated, completed, consummated, or enforced as required or permitted
by this [Act] or by the law that otherwise would apply if this [Act] did not take effect.
(c) This [Act] does not affect an action, case, or proceeding commenced before this [Act] takes effect.
SECTION 9-703. SECURITY INTEREST PERFECTED BEFORE EFFECTIVE DATE.
(a) If a security interest is enforceable and has priority over the rights of a lien creditor immediately before this
[Act] takes effect and the applicable requirements for enforceability and perfection under this [Act] are satisfied
without further action when this [Act] takes effect, the security interest is a perfected security interest under this
[Act].
(b) Except as otherwise provided in Section 9-705, if a security interest is a perfected security interest under
[former Article 9] immediately before this [Act] takes effect but the applicable requirements for enforceability or
perfection under this [Act] are not satisfied when this [Act] takes effect, the security interest:
(1) is a perfected security interest for one year after this [Act] takes effect;
(2) remains enforceable thereafter only if the security interest becomes enforceable under Section 9-203 before
the year expires; and
(3) remains perfected thereafter only if the applicable requirements for perfection under this [Act] are satisfied
before the year expires.
SECTION 9-704. SECURITY INTEREST UNPERFECTED BEFORE EFFECTIVE DATE. A security interest
that is enforceable immediately before this [Act] takes effect but which is subordinate to the rights of a person that
becomes a lien creditor at that time:
(1) remains an enforceable security interest for one year after this [Act] takes effect;
(2) remains enforceable thereafter if the security interest becomes enforceable under Section 9-203 when this
[Act] takes effect or within one year thereafter; and
(3) becomes perfected:
(A) without further action, when this [Act] takes effect if the applicable requirements for perfection under this
[Act] are satisfied before or at that time; or
(B) when the applicable requirements for perfection are satisfied if the requirements are satisfied after that time.
SECTION 9-705. EFFECTIVENESS OF ACTION TAKEN BEFORE EFFECTIVE DATE OF [ACT].
(a) If action other than the filing of a financing statement, is taken before this [Act] takes effect and the action
would have resulted in priority of a security interest over the rights of a lien creditor had the security interest
become enforceable before this [Act] takes effect, the action is sufficient to perfect a security interest that attaches
under this [Act] within one year after this [Act] takes effect. An attached security interest becomes unperfected
one year after this [Act] takes effect unless the security interest becomes a perfected security interest under this
[Act] before the expiration of that period.
64

(b) The filing of a financing statement before this [Act] takes effect is sufficient to perfect a security interest
that attaches after this [Act] takes effect to the extent the filing would satisfy the applicable requirements for
perfection under this [Act].
(c) This [Act] does not render ineffective an effective financing statement that is filed before this [Act] takes
effect in accordance with the law of the jurisdiction governing perfection as provided in [former Section 9103]. However, except as otherwise provided in subsection (d):
(1) the financing statement ceases to be effective at the earlier of:
(A) the time the financing statement would have ceased to be effective under the law of the jurisdiction in
which it is filed; or
(B) five years after this [Act] takes effect; and
(2) a continuation statement filed after this [Act] takes effect does not continue the effectiveness of the
(d) A continuation statement filed after this [Act] takes effect and in accordance with the law of the jurisdiction
governing perfection as provided in Part 3 is effective to continue the effectiveness of a financing statement
filed in that jurisdiction before this [Act] takes effect.
(e) This [Act] does not render ineffective an effective financing statement that was filed before this [Act] takes
effect and in the office specified in [former Section 9-401]. However, except as otherwise provided in
subsection (f):
(1) the financing statement ceases to be effective at the earlier of:
(A) the time the financing statement would have ceased to be effective under [former Article 9]; or
(B) five years after this [Act] takes effect; and
(2) a continuation statement filed after this [Act] takes effect does not continue the effectiveness of the
(f) A continuation statement filed after this [Act] takes effect and in the office specified in Section 9-501 is
effective to continue the effectiveness of a financing statement filed in that office before this [Act] takes effect.
(g) A financing statement that includes a financing statement filed before this [Act] takes effect and a
continuation statement filed after this [Act] takes effect is effective only to the extent that it satisfies the
requirements of Part 5 for an initial financing statement.
SECTION 9-706. WHEN INITIAL FINANCING STATEMENT SUFFICES AS CONTINUATION STATEMENT.
(a) The effectiveness of a financing statement filed before this [Act] takes effect may be continued by filing in
the office specified in Section 9-501 an initial financing statement complying with the requirements of
subsection (b) if:
(1) the filing of a financing statement in that office is effective to perfect a security interest; and
(2) the pre-effective-date financing statement was filed in an office in another State or another office in this
State.
(b) To be effective for purposes of subsection (a), an initial financing statement must:
(1) satisfy the requirements of Part 5 for an initial financing statement;
(2) identify the pre-effective-date financing statement by indicating the office in which the financing statement
was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most
recent continuation statement filed with respect to the financing statement; and
(3) indicate that the pre-effective-date financing statement remains effective.
SECTION 9-707. PERSONS ENTITLED TO FILE INITIAL FINANCING STATEMENT OR CONTINUATION
STATEMENT. A person may file an initial financing statement or a continuation statement under this part if:
(1) the secured party of record authorizes the filing; and
(2) the filing is necessary under this part:
(A) to continue the effectiveness of a financing statement filed before this [Act] takes effect; or
(B) to perfect or continue the perfection of a security interest.
SECTION 9-708. PRIORITY.
65

Recommendations

(a) [Former Article 9] determines the priority of conflicting claims to collateral if the relative priorities of the
parties were fixed before this [Act] takes effect. In other cases, this [Act] determines priority.
(b) For purposes of Section 9-322(a), the priority of a security interest that becomes a perfected security interest
under Section 9-704 dates from the time the applicable requirements for perfection are satisfied. This subsection
does not apply to conflicting security interests each of which becomes a perfected security interest under Section
9-704.
(c) For purposes of Section 9-322(a), the priority of a security interest that becomes enforceable under Section 9203 of this [Act] dates from the time this [Act] takes effect if the security interest is perfected under this [Act] by
the filing of a financing statement before this [Act] takes effect which would not have been effective to perfect the
security interest under [former Article 9]. This subsection does not apply to conflicting security interests each of
which is perfected by the filing of such a financing statement.
66

Appendix V
Where to File
A Summary Chart Under Prior UCC Article 9-4
Most Personal Property
Farm
Related
Consumer
Goods
Crops*
Local
Local
Local
Realty Related
Real Estate Filing
(Local Personal Property
Filing)**
District Recorder
Local
Local
Local
Judge of Probate
Local
Local
Local
Circuit Clerk
Secretary of State
Local
Local
Local
County Recorder
CA
Secretary of State
Central
Local
Local (Land) County Recorder
CO
Central
Central
Central
County Clerk & Recorder
CT
Secretary of State
or County Clerk
(Central Index))
Secretary of State
Central
Central
Central
Town/City Clerk
DC
County Recorder
NA
NA
NA
County Recorder
DE
Secretary of State
Central
Central
Central
County Recorder
FL
Secretary of State
Local
Central
Local
Clerk of Circuit Court
GA
None (Central Index)
Central
Central
Central
Clerk of Superior Court
HI
Bureau of Conveyances
IA
Secretary of State
Central
Local
Central
County Recorder
ID
Secretary of State
Central
Central
Central
County Recorder
State
Central Filing Office
AK
AL
Department of Natural
Resources
Secretary of State
AR
Secretary of State
AZ
Local Filing Office

(Dual Filing State)
and Circuit Clerk
Clerk Superior Court
67
Special Personal Property
Bureau of Conveyances
Realty Related
Appendix V

Recommendations

Farm
Related
Consumer
Goods
Crops*
Secretary of State
Central
Local
Central
Real Estate Filing

Filing)**
County Recorder
IN
Secretary of State
Local
Local
Local
County Recorder
KS
Secretary of State
Central
Local
Central
Register
KY
Secretary of State (Out of County Clerk

state only)
None (Central Index)
Clerk of Court
Local
Local
Local
County Clerk
Central
Central
Central
Clerk of Court
Local
Local
Local
Central
Central
Register
of
Deeds
(Town Clerk)
ME
Secretary of the
Commonwealth
Department of
Assessments & Taxation
Secretary of State
Local
Local
County Register
MI
Secretary of State
Local
Local
Local
County Register
MN
Secretary of State or
Recorder
Secretary of State
Local
Local
Local
County Recorder
and County Recorder
Local
Local
Local
County Recorder
Secretary of State
and Chancery Clerk
Local
Local
Local
Chancery Clerk
Central
Local
Central
Local
Local
Central
Central
Local
Central
Clerk & Recorder

Register of Deeds
County Register
Local
Local
Local
County Register
Local
Local
Local
Local
Local
Local
Local
Local
Local
County Register
County Clerk/Register
County Clerk
State
IL
LA
MA
MD
MO
MS
MT
NC
ND
NE
NH
NJ
NM
Local Filing Office

(Dual Filing State)
and Town/City Clerk
and Clerk of Circuit Court Central

(until 7/1/95)
Central
Secretary of State
Secretary of State
and Register of Deeds
Secretary of State or
County Register
(Central Index)
state only)
Secretary of State
and Town/City Clerk
Department of Revenue
Secretary of State
State
Local Filing Office

Farm
Consumer
Crops
Realty Related
Real Estate Filing
68

(Dual Filing State)
Related
Goods
Central
Local
Local
Local
Central
Local
Local
Local
Local
Central
Central
Local
Local
Local
Local
Local
Central
Local

Filing)2
County Recorder
County Clerk (Register) 3
County Recorder
County Clerk
County Clerk
County
Recorder
(Prothonotary)
NV
NY
OH
OK
OR
PA
Secretary of State
Secretary of State
Secretary of State
Oklahoma County Clerk
Secretary of State
Department of State
RI
Secretary of State
Local
Central
Local
Town Recorder of Deeds
SC
Secretary of State
Local
Local
Local
County Register
or Clerk of Court
SD
Secretary of State
Local
Central
Central
County Register
TN
Secretary of State
Local
Local
Local
County Register
TX
Secretary of State
Central
Local
Central
County Clerk
UT
Division of Corporations &

Commercial Code
Central
Central
Central
County Recorder
VA
Corporation Commission
And Clerk of Circuit Court
Local
Local
Local
VT
Secretary of State
And Town/City Clerk

(until 7/1/95)
Local
Local
Local
Town/City Clerk
WA
Department of Licensing
Central
Central
Central
County Auditor
WI
Department of Financial
Institutions
Local
Local
Local
County Register
WV
Secretary of State
Central
Local
Central
County Clerk
WY

state and A/R only)
Local
Central
Local
County Clerk
And County Clerk/Register

And County Recorder
And Prothonotary
Notes
1.
2.
3.
CropsIf local filing is indicated, and unless otherwise indicated, crop filings are submitted to the counties where the debtor and the land is located, if they are different.
Local personal property filings are filed with the same official as realty related property unless a separate title is given in parentheses.
In New York, the statute reference to local filing reads the office of the filing officer without naming her title. In fact the county recorder is also the county clerk, so the
distinction is moot. In New York City the filing officer is called the City Register.
Recommendations
69

Appendix VIUCC Drafting Committee
Here is a list of the people involved in drafting the revised UCC.
Members
WILLIAM M. BURKE, 20th Floor, Standard Chartered Bank Building, 4 Des Voeux Road, Hong Kong, Chair, wburke@shearman.com
MARION W. BENFIELD, JR., Wake Forest University, School of Law, P.O. Box 7206, Winston-Salem, NC 27109
DALE G. HIGER, Suite 1015, One Capital Center, 999 Main Street, Boise, ID 83702
WILLIAM C. HILLMAN, U.S. Bankruptcy Court, Room 1101, 10 Causeway Street, Boston, MA 02222
MICHAEL HOUGHTON, P.O. Box 1347, 18th Floor, 1201 N. Market Street, Wilmington, DE 19899
RANDAL C. PICKER, University of Chicago Law School, 1111 E. 60th Street, Chicago, IL 60637
DONALD J. RAPSON, Room 3338, 650 CIT Drive, Livingston, NJ 07039, The American Law Institute Representative
HARRY C. SIGMAN, P.O. Box 67E08, Los Angeles, CA 90067, The American Law Institute Representative
BRADLEY Y. SMITH, 20th Floor, 450 Lexington Avenue, New York, NY 10017, The American Law Institute Representative
EDWIN E. SMITH, 21st Floor, 150 Federal Street, Boston, MA 02110
SANDRA S. STERN, 509 Madison Avenue, Suite 2004, New York, NY 10022
STEVEN L. HARRIS, Chicago-Kent College of Law, 565 W. Adams Street, Chicago, IL 60661-3691, Co-Reporter, sharris@kentlaw.edu
CHARLES W. MOONEY, JR., University of Pennsylvania, School of Law, 3400 Chestnut Street, Philadelphia, PA 19104, Co-Reporter,
cmooney@oyez.law.upenn.edu
Ex Officio Members
GENE N. LEBRUN, P.O. Box 8250, 9th Floor, 909 St. Joseph Street, Rapid City, SD 57709, president
HENRY M. KITTLESON, P.O. Box 32092, 92 Lake Wire Drive, Lakeland, FL 33802, Division Chair
American Bar Association Advisors

STEVEN O. WEISE, 40th Floor, 601 S. Figueroa Street., Los Angeles, CA 90017, Advisor
RICHARD CHERIN, 1 Riverfront Plaza, Newark, NJ 07102, Business Law Section Advisor
RICHARD GOLDBERG, 51st Floor, 1735 Market Street, Philadelphia, PA 19103, Real Property, Probate & Trust Law Section Advisor
LAWRENCE A. MANZANARES, Courtroom 105A, City & County Building, Denver, CO 80202, Judicial Administration Division,
National Conference of Special Court Judges Advisor
Executive Director
FRED H. MILLER, University of Oklahoma, College of Law, 300 Timberdell Road, Norman, OK 73019, Executive Director
WILLIAM J. PIERCE, 1505 Roxbury Road, Ann Arbor, MI 48104, Executive Director Emeritus

Recommendations
71
Appendix VIUCC Drafting Committee

Appendix VIINational Standard UCC Filing Forms
To obtain copies of the latest national standard forms, got http://lamb.sos.state.tx.us/sts/forms.htm.
Appendix VIINational Standard UCC Filing Forms
72

Appendix VIIIState Variations to Chapter 7 Recommendations
This appendix will quote and discuss variations to the language recommended for recording-related sections of
new Article 9 as enacted by the states.

Recommendations
73
Appendix VIIIState Variations to Chapter 7 Recommendations

County Recorder and Ucc

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

County Recorder and Ucc

Uploaded by

Copyright:

Available Formats

Recorders Guide to New Article 9-5

Recorders Guide to New Article 9-5

Recorders Guide to New Article 9-5

Appendix IArticle 9 Part 1Definitions ...................................................................44

* Ernst Publishing Company. All rights reserved

Recorders Guide to New Article 9-5

Recorders Guide to New Article 9-5

Terms Used in this Guide

New Version of Article 9

Deleted: Appendix VIIIState

Recorders Guide to New Article 9-5

How To Use This Guide

Task Force Position (Proposed)

Recorders Guide to New Article 9-5

Comments and Suggestions

Deleted: Appendix VIIIState

Recorders Guide to New Article 9-5

What Does UCC Have To Do With Real Estate?

What is the Uniform Commercial Code?

1. Real estate is a document recording system/

2. Real estate is an asset-based system/

Chapter 2Real Estate and the Uniform Commercial Code

Recorders Guide to New Article 9-5

4. Real estate documents are accepted by 3,600 recording offices/

6. Real estate recording is document based/

Chapter 2Real Estate and the Uniform Commercial Code

Deleted: Appendix VIIIState

Recorders Guide to New Article 9-5

7. Each real estate recording has a life of its own/

8. A real estate recording is forever/

9. A mortgage is satisfied, released or canceled/

Chapter 2Real Estate and the Uniform Commercial Code

Recorders Guide to New Article 9-5

11. Real estate documents may have exhibits, acknowledgments, etc./

12. Basic real estate recording fee structures are page-based/

13. Signatures on real estate documents require acknowledgment/

Chapter 2Real Estate and the Uniform Commercial Code

Deleted: Appendix VIIIState

Recorders Guide to New Article 9-5

Chapter 2Real Estate and the Uniform Commercial Code

Recorders Guide to New Article 9-5

a. No Local Personalty Filing

c. No Separate UCC Index Required in Recording Offices

2. What About Dual Filing?

Chapter 3Frequently Asked Questions (FAQs)

Recorders Guide to New Article 9-5

7. Does a Recording Office Need To Do Anything When a Filing Lapses?

8. What About Lost Revenue in My Office?

9. What Are the Criteria For Rejecting a UCC Filing?

Chapter 3Frequently Asked Questions (FAQs)

Recorders Guide to New Article 9-5

11. What Happens If a Recording Office Rejects a Legally Valid Filing?

13. What Do Recorders Need To Know About Transition Rules?

Chapter 3Frequently Asked Questions (FAQs)

Deleted: Appendix VIIIState

Recorders Guide to New Article 9-5

Chapter 4Principles of New Article 9 Part 5 (A Rebalancing Act)

Four New Fundamental Principles

Recorders Guide to New Article 9-5

Rebalanced Responsibilities of Filers (Do No Harm) and Searchers (Determine Effectiveness)

(2) Modified Role of Filing OfficesFull Disclosure and Rejection Criteria

(A) Rejection Criteria

Chapter 4Principles of New Article 9 Part 5 (A Rebalancing Act)

Recorders Guide to New Article 9-5